Randomizing Endowments: An Experimental Study of Rational Expectations and Reference-Dependent Preferences
Abstract
We test expectations-based reference dependence in market experiments with probabilistic forced exchange. Koszegi and Rabin (2006) predict that when the probability of forced exchange increases, individuals cannot expect to stick with the status quo, and should grow more willing to exchange. This mechanism may eliminate and even reverse the "endowment effect" (Knetsch and Sinden 1984; Kahneman, Knetsch, and Thaler 1990). In a series of experiments with overall 930 subjects, we show some tentative support for the notion that attitudes toward exchange are influenced by the probability of forced exchange. However, the results are sensitive to small changes in experimental design.
Additional Information
© 2019 American Economic Association. We are grateful for the insightful comments of many colleagues and seminar audiences at UCSB, Caltech, Harvard University, Central European University, Stockholm School of Economics, the University of Bonn, the University of Zurich, Universitat Pompeu Fabra, Royal Holloway University of London, University of Oxford, and University of Lausanne. We also acknowledge the generous support of the Swiss National Science Foundation, grant CR11I1_137980 (Goette), and the National Science Foundation, grant SES-1024683 (Sprenger). The authors declare having no conflict of interest. This research was undertaken while Cerulli-Harms and Goette were at the Department of Economics at the University of Lausanne. Institutional Review Board approval for the collection of data on human subjects has been obtained by the Ethics Committee of the Faculty of Business and Economics, University of Lausanne where all the relevant experiments have been conducted.Attached Files
Published - mic.20170271.pdf
Submitted - dp8639.pdf
Supplemental Material - 8795.pdf
Supplemental Material - 8796.zip
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Additional details
- Eprint ID
- 104498
- Resolver ID
- CaltechAUTHORS:20200722-071826445
- CR11I1_137980
- Swiss National Science Foundation (SNSF)
- SES-1024683
- NSF
- Created
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2020-07-22Created from EPrint's datestamp field
- Updated
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2021-11-16Created from EPrint's last_modified field