The endowment effect in the future: How time shapes buying and selling prices

Abstract

Previous research has focused on studying the endowment effect for transactions that take place in the present. Many real-world transactions, however, are delayed into the future (i.e., people agree to buy or sell, but the actual transaction does not materialize until a later time). Here we investigate how transaction timing affects the endowment effect. In five studies, we show that the endowment effect systematically increases as transactions are delayed into the future. Specifically, buying prices significantly decrease as the transaction is delayed, while selling prices remain constant, resulting in an amplified endowment effect (Experiment 1). This pattern is not produced by a discounting of the money involved in the transaction (Experiment 2), and it holds across different types of items (Experiment 3). We also show that the phenomenon cannot be explained by sellers anticipating becoming increasingly attached to the items over time (Experiment 4). Finally, we demonstrate that this increased endowment effect in the future holds in the field, in the context of a real market and with real transactions (Experiment 5).

Negative and positive contamination in secondhand fashion consumption: does culture matter?

“…Aversion to used or preowned objects stemming from interpersonal contamination has been observed across different cultures (McDaniel and Andersen, 1998;Remland et al, 1995). Studies have found that the willingness to pay for pre-owned items decreases as the ownership duration increases as the future value of the item decreases (Yamamoto and Navarro-Martinez, 2019). H4 and H5 are thus developed as follows.…”