Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102716
Authors: 
Dertwinkel-Kalt, Markus
Köhler, Katrin
Year of Publication: 
2014
Series/Report no.: 
DICE Discussion Paper 161
Abstract: 
Whereas exchange asymmetries for goods are well known, we provide a first incentivized test of exchange asymmetries for bads (i.e., items yielding a negative utility). On the one hand, prospect theory predicts an endowment effect for goods and bads, on the other hand, attention-based theories such as salience theory predict an endowment effect for goods, but a reverse endowment effect (i.e., a particular high willingness to switch) for bads. Since both strands of research often make the same predictions concerning biased decision making, the investigation of exchange asymmetries for bads is a key element to distinguish between their validity. In our experiment, we find a strong endowment effect for bads, so that our results speak in favor of prospect theory.
Subjects: 
Loss Aversion
Salience Theory
Prospect Theory
Endowment Effect
JEL: 
D03
ISBN: 
978-3-86304-160-1
Document Type: 
Working Paper

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