Endowment effect and the gap between WTP and WTA

Qin, Botao (2019): Endowment effect and the gap between WTP and WTA.

Abstract

I used an auction experiment in China and confirmed that there is a WTP-WTA gap. I used the solemn oath commitment device and found that it reduces the gap in the long possession treatment. However, the gap still exists in the short possession treatment. The evidence suggests that taking an oath to tell the truth with an incentive-compatible mechanism could mitigate the WTP-WTA gap.

• Item Type: MPRA Paper
• Language: English
• Keywords: Endowment effect; WTP-WTA gap; Oath
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D46 - Value Theory

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