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A pseudo-endowment effect in internet auctions

Bramsen, Jens-Martin (2008): A pseudo-endowment effect in internet auctions.

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Although bidders in an internet auction do not obtain the actual ownership of the item during the auction, they still act according to an endowment effect. In a unique data set of 17,000 Danish furniture auctions I find that having the leading bid, both in terms of time and dollars, will affect the bidders probability to rebid if outbid. Thus, expectations to own, i.e. “pseudo-endowment ”, seem to affect bidders’ willingness to pay in a relative fast and straightforward manor. Gener- ally, these data therefore support that the reference point, from which we measure losses and gains, is closely related to expectations.

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