Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108946
Authors: 
Fehr, Dietmar
Hakimov, Rustamdjan
Kübler, Dorothea
Year of Publication: 
2015
Series/Report no.: 
WZB Discussion Paper SP II 2015-204
Abstract: 
We report on experiments to replicate Plott and Zeiler's (2005) findings that the WTP-WTA gap disappears when using procedures that are aimed at reducing misunderstandings, such as training rounds for the BDM mechanism. Following the design by Plott and Zeiler (2005) and Isoni, Loomes, and Sugden (2011) who re-ran the Plott/Zeiler experiments to study the paid practice rounds with lotteries, we replicate the findings from the lottery tasks where a WTP-WTA gap is present in all studies. However, unlike in the two previous studies the WTP-WTA gap does not disappear in the main task where subjects state their WTA or WTP for a mug. We introduce two additional lottery tasks to classify subjects and find that even for the most rational group of subjects who never make dominated choices in the paid practice rounds, the WTP-WTA gap in the mug task exists. The findings are replicated in a similar experiment with USB sticks instead of mugs.
Subjects: 
endowment effect
WTP-WTA gap
BDM mechanism
misconceptions
replication
JEL: 
C72
C92
Document Type: 
Working Paper

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