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Regnier SD, Rzeszutek MJ, Strickland JC, Shellenberg TP, Stoops WW. The endowment effect and temporal discounting of drug and non-drug commodities. Pharmacol Biochem Behav 2023; 232:173638. [PMID: 37717822 PMCID: PMC10947334 DOI: 10.1016/j.pbb.2023.173638] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Grants] [Track Full Text] [Journal Information] [Submit a Manuscript] [Subscribe] [Scholar Register] [Received: 08/10/2023] [Revised: 09/11/2023] [Accepted: 09/12/2023] [Indexed: 09/19/2023]
Abstract
OBJECTIVES Despite a rich history of behavioral economic research on substance use there remains a need for further exploration of behavioral mechanisms that may underlie the etiology or persistence of substance use disorder. The purpose of this study was to measure the association between delay discounting and the endowment effect in people who smoke cigarettes, use cocaine, and controls, using online crowdsourcing. METHODS Participants were categorized to a cocaine group (n = 36), cigarette group (n = 48), or control group (n = 47) based on recent reported drug use. Based on group, participants completed up to three delay discounting tasks (i.e., money, cigarettes and cocaine), an endowment effect task for multiple commodities, and other questionnaires. RESULTS Participants in the cocaine and cigarette group demonstrated an increased rate in discounting for money compared to controls. Participants in the cocaine group had a less pronounced endowment effect for beer, compared to controls, as suggested by willingness to accept less to sell beer. A significant negative association was found between endowment ratios for non-drug commodities and delay discounting for cigarettes, but not monetary or cocaine delay discounting, indicating an inconsistent relationship between the two measures. CONCLUSIONS These results support prior research demonstrating a relationship between cocaine and cigarette use and delay discounting and extend that work by measuring the association between delay discounting and the endowment effect. Future research should include both loss aversion and endowment effect tasks and compare their relationship with delay discounting among people that use drugs.
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Affiliation(s)
- Sean D Regnier
- Department of Behavioral Science, University of Kentucky College of Medicine, 1100 Veterans Drive, Medical Behavioral Science Building, Lexington, KY 40536-0086, USA
| | - Mark J Rzeszutek
- Department of Family & Community Medicine, University of Kentucky College of Medicine, 2195 Harrodsburg Road, Lexington, KY 40504, USA
| | - Justin C Strickland
- Department of Psychiatry and Behavioral Sciences, Johns Hopkins University School of Medicine, 5510 Nathan Shock Dr, Baltimore, MD 21224, USA
| | - Thomas P Shellenberg
- Department of Behavioral Science, University of Kentucky College of Medicine, 1100 Veterans Drive, Medical Behavioral Science Building, Lexington, KY 40536-0086, USA
| | - William W Stoops
- Department of Behavioral Science, University of Kentucky College of Medicine, 1100 Veterans Drive, Medical Behavioral Science Building, Lexington, KY 40536-0086, USA; Department of Psychiatry, University of Kentucky College of Medicine, 245 Fountain Court, Lexington, KY 40509-1810, USA; Department of Psychology, University of Kentucky College of Arts and Sciences, 171 Funkhouser Drive, Lexington, KY 40506-0044, USA; Center on Drug and Alcohol Research, University of Kentucky College of Medicine, 845 Angliana Ave, Lexington, KY 40508, USA.
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McGranaghan C, Otto SG. Choice uncertainty and the endowment effect. J Risk Uncertain 2022; 65:83-104. [PMID: 35729902 PMCID: PMC9200560 DOI: 10.1007/s11166-022-09387-8] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Figures] [Subscribe] [Scholar Register] [Accepted: 06/07/2022] [Indexed: 06/15/2023]
Abstract
UNLABELLED We experimentally test for the role of choice uncertainty in generating "endowment effects" - the robust empirical finding that endowing participants with an item raises their reported valuation relative to participants being asked to purchase it instead. While there is some compelling evidence concerning trade uncertainty in the literature, there is substantially less evidence regarding the importance of choice uncertainty. This paper provides novel support for the significance of choice uncertainty in the context of both trading and stated valuations. In a primary set of studies, we find that reducing choice uncertainty eliminates under-trading in the exchange setting and decreases (but does not eliminate) the difference in average valuations reported by buyers and sellers, mainly by decreasing the number of extreme valuations by sellers. Interestingly, our treatment does not lead to a significant increase in the number of mutually acceptable trades implied by stated valuations. Comparing the results from our two primary experiments therefore suggests that value uncertainty continues to play a role in generating valuation asymmetries even after relevant product uncertainty has been resolved. A set of follow-up studies with modified designs replicates this finding in the exchange setting but fails to generate a valuation asymmetry in the control condition, possibly due to pandemic-related mitigation measures and less participant time with the endowed item. SUPPLEMENTARY INFORMATION The online version contains supplementary material available at 10.1007/s11166-022-09387-8.
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Sindermann C, Yang H, Yang S, Elhai JD, Montag C. Willingness to accept (WTA), willingness to pay (WTP), and the WTA/WTP disparity in Chinese social media platforms: Descriptive statistics and associations with personality and social media use. Acta Psychol (Amst) 2022; 223:103462. [PMID: 35030363 DOI: 10.1016/j.actpsy.2021.103462] [Citation(s) in RCA: 2] [Impact Index Per Article: 1.0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 09/28/2021] [Revised: 12/04/2021] [Accepted: 12/08/2021] [Indexed: 11/19/2022] Open
Abstract
The amount of money individuals were willing to accept (WTA) to discontinue using prominent Chinese social media platforms (WeChat/QQ), the willingness to pay (WTP) for using these platforms, as well as WTA/WTP disparities were investigated in between-groups and within-subjects design studies to examine their existence, size, and psychological correlates in the form of personality and social media use habits. Individuals were recruited at Chinese universities in three separate surveys. For between-groups investigations, four samples were investigated: WTA and WTP samples for investigations in the context of WeChat as well as WTA and WTP samples for QQ. For within-subjects investigations, individuals completed items on WTA and WTP for WeChat/QQ, the Big Five Inventory, time spent on WeChat/QQ, and the short Bergen Social Media Addiction Scale. Two samples providing data on WeChat and QQ, respectively, were investigated. Across study designs and for both WeChat and QQ we found evidence for high WTA and comparatively low WTP scores, thus, large WTA/WTP disparities. Individual differences in the disparities were negatively associated with Openness across social media platforms. The results reveal a generally low acceptance to pay for social media use, which is important against the background of discussions on monetary payment models. Moreover, a complex interplay between individual characteristics, characteristics of the service, and how and why the service is used seems to underly WTA and the WTA/WTP disparity. Finally, methodological implications of the present results for forthcoming studies assessing valuation (WTA, WTP) in the context of social media are discussed.
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Affiliation(s)
- Cornelia Sindermann
- Department of Molecular Psychology, Institute of Psychology and Education, Ulm University, 89081 Ulm, Germany.
| | - Haibo Yang
- Academy of Psychology and Behavior, Faculty of Psychology, Tianjin Normal University, Tianjin 300387, China.
| | - Shixin Yang
- Academy of Psychology and Behavior, Faculty of Psychology, Tianjin Normal University, Tianjin 300387, China; School of Psychology, Guizhou Normal University, Guiyang 550001, China.
| | - Jon D Elhai
- Department of Psychology and Department of Psychiatry, University of Toledo, Toledo, OH 43606, USA.
| | - Christian Montag
- Department of Molecular Psychology, Institute of Psychology and Education, Ulm University, 89081 Ulm, Germany; The Clinical Hospital of the Chengdu Brain Science Institute, Key Laboratory for Neuroinformation, University of Electronic Science and Technology of China, Chengdu 611731, China.
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Wahyono H, Narmaditya BS, Wibowo A, Kustiandi J. Irrationality and economic morality of SMEs' behavior during the Covid-19 pandemic: lesson from Indonesia. Heliyon 2021; 7:e07400. [PMID: 34278019 DOI: 10.1016/j.heliyon.2021.e07400] [Citation(s) in RCA: 5] [Impact Index Per Article: 1.7] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 04/30/2021] [Revised: 06/08/2021] [Accepted: 06/22/2021] [Indexed: 11/22/2022] Open
Abstract
The Covid-19 pandemic provides severe consequences of economic behavior as an increase of unemployment rates, and providing a new business creation can continue the economic activities. This study explores a functional relationship between irrational behavior, which proxied by loss aversion, the endowment effect, and herd behavior toward the morality of economic among small and medium enterprises (SMEs), as well as the mediating role of altruism in the perspectives of behavioral economics. The research involved a quantitative survey and cross-sectional data with a sample of 288 SMEs in East Java of Indonesia. Using structural equation modeling, the findings reveal that the endowment effect and herd behavior have a robust relationship with economic morality. This study also notes that altruism has a positive link with economic morality, and it has successfully mediated the irrational behavior of SMEs in Indonesia. In addition, the marketing strategy also distinguishes altruism's impact on morality economic.
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Collard P, Walford A, Vernon L, Itagaki F, Turk D. The relationship between endowment and ownership effects in memory across cultures. Conscious Cogn 2020; 78:102865. [PMID: 31923884 DOI: 10.1016/j.concog.2019.102865] [Citation(s) in RCA: 1] [Impact Index Per Article: 0.3] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 07/17/2019] [Revised: 12/09/2019] [Accepted: 12/20/2019] [Indexed: 10/25/2022]
Abstract
An object one owns is typically more highly valued than an equivalent object owned by another person. This endowment effect has been attributed to the aversion of loss of one's possessions (through selling), or the added value of an item due to self-association (through owning). To date, investigation of these mechanisms has been hampered by the between-subjects methodology traditionally employed to measure endowment. Over two experiments, we report a novel within-subjects method for measuring an endowment bias. In these studies, Western participants showed enhanced valuation of owned items, whereas East-Asian participants did not. This endowment bias also correlated with the ownership effect in memory (a measure of self-referential processing) in Western, but not East-Asian participants. Our results suggest that the endowment effect is partly predicated on the same factors that influence the ownership effect and that this commonality is likely linked to conceptions of ownership specifically, and self-concept more generally.
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Abstract
Prior research on the endowment effect has tended to focus on decisions made by individuals acting on their own account rather than on others’ behalf. This article reports on three experiments that modeled this “for-self” versus “for-others” distinction and measured its effects on prices. Specifically, our participants who were asked to make trading decisions for other people subsequently reported decreases in the endowment effect. We concluded that, in the context of the trading of goods, perceived ownership and differences in focus on the traded products’ positive and negative features mediated the diminished endowment effect our experiments identified.
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Affiliation(s)
- Sui-Min Wang
- Department of Business Administration, National Chung Cheng University, Taiwan
| | - Yin-Hui Cheng
- Department of International Business, National Taichung University of Education, Taiwan
| | - Chao-Feng Lee
- Department of Business Administration, National Chung Cheng University, Taiwan
| | - Shih-Chieh Chuang
- Department of Business Administration, National Chung Cheng University, Taiwan
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Abstract
People often indicate a higher price for an object when they own it (i.e., as sellers) than when they do not (i.e., as buyers)-a phenomenon known as the endowment effect. We develop a cognitive modeling approach to formalize, disentangle, and compare alternative psychological accounts (e.g., loss aversion, loss attention, strategic misrepresentation) of such buyer-seller differences in pricing decisions of monetary lotteries. To also be able to test possible buyer-seller differences in memory and learning, we study pricing decisions from experience, obtained with the sampling paradigm, where people learn about a lottery's payoff distribution from sequential sampling. We first formalize different accounts as models within three computational frameworks (reinforcement learning, instance-based learning theory, and cumulative prospect theory), and then fit the models to empirical selling and buying prices. In Study 1 (a reanalysis of published data with hypothetical decisions), models assuming buyer-seller differences in response bias (implementing a strategic-misrepresentation account) performed best; models assuming buyer-seller differences in choice sensitivity or memory (implementing a loss-attention account) generally fared worst. In a new experiment involving incentivized decisions (Study 2), models assuming buyer-seller differences in both outcome sensitivity (as proposed by a loss-aversion account) and response bias performed best. In both Study 1 and 2, the models implemented in cumulative prospect theory performed best. Model recovery studies validated our cognitive modeling approach, showing that the models can be distinguished rather well. In summary, our analysis supports a loss-aversion account of the endowment effect, but also reveals a substantial contribution of simple response bias.
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Carrera M, Royer H, Stehr M, Sydnor J. Can financial incentives help people trying to establish new habits? Experimental evidence with new gym members. J Health Econ 2018; 58:202-214. [PMID: 29550665 PMCID: PMC5899425 DOI: 10.1016/j.jhealeco.2018.02.010] [Citation(s) in RCA: 14] [Impact Index Per Article: 2.3] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 06/28/2017] [Revised: 12/29/2017] [Accepted: 02/15/2018] [Indexed: 05/14/2023]
Abstract
Can financial incentives aid habit formation in people attempting to establish a positive health behavior? We provide evidence on this question from a randomized controlled trial of modest-sized incentives to attend the gym among new members of a fitness facility. Our experiment randomized 690 participants into a control group that received a $30 payment unconditionally or one of 3 incentive groups that received a payment for attending the gym at least 9 times over the first 6 weeks of membership. Two incentive treatment arms offered monetary payments of $30 and $60. The third incentive treatment, motivated by the endowment effect, offered a physical item worth $30. All three incentives had only small impacts on attendance during members' first 6 weeks and no effect on their post-incentive visit trajectories. We document substantial overconfidence among new members about their likely visits and discuss how overconfidence may undermine the effectiveness of incentive programs.
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Affiliation(s)
| | - Heather Royer
- University of California, Santa Barbara & IZA & NBER, United States
| | | | - Justin Sydnor
- University of Wisconsin, Madison & NBER, United States
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Humphrey SJ, Lindsay L, Starmer C. Consumption experience, choice experience and the endowment effect. J Econ Sci Assoc 2017; 3:109-20. [PMID: 31998601 DOI: 10.1007/s40881-017-0044-z] [Citation(s) in RCA: 1] [Impact Index Per Article: 0.1] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Subscribe] [Scholar Register] [Received: 12/01/2016] [Revised: 11/07/2017] [Accepted: 11/08/2017] [Indexed: 10/25/2022]
Abstract
We report experiments investigating how experience influences the endowment effect. Our experiments feature endowments which are bundles of unfamiliar consumption goods. We examine how a subject's willingness to swap items from their endowment is influenced by prior experiences of tasting the goods in question and by prior experiences of choosing between them. We do not find a statistically significant endowment effect in our baseline treatment and, because of this, we are unable to test for an effect of consumption experience. We do find an endowment effect when the endowment is acquired in two instalments and, in this setting, we find some evidence that choice experience increases trading. In a follow-up experiment, we find evidence that the absence of an endowment effect in our baseline treatment is due to subjects being more willing to swap when they do not have to give up the last unit of their endowment.
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Kogler C, Kühberger A, Gilhofer R. Real and hypothetical endowment effects when exchanging lottery tickets: Is regret a better explanation than loss aversion? J Econ Psychol 2013; 37:42-53. [PMID: 23913998 PMCID: PMC3711273 DOI: 10.1016/j.joep.2013.05.001] [Citation(s) in RCA: 5] [Impact Index Per Article: 0.5] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 08/17/2011] [Revised: 05/06/2013] [Accepted: 05/13/2013] [Indexed: 05/25/2023]
Abstract
The endowment effect is the finding that possession of an item adds to its value. We introduce a new procedure for testing this effect: participants are divided into two groups. Possession group participants inspect a numbered lottery ticket and know it is theirs, while inspection group participants only inspect a lottery ticket without being endowed with it. Subsequently participants choose between playing the lottery with this (possessed or inspected) ticket, or exchanging it for another one. Our procedure tests for the effect of endowment while controlling for the influence of transaction costs as well as for inspection effects and the influence of bargaining roles (buyer vs. seller), which often afflict experimentation with the endowment effect. In a real setting, tickets in possession were valued significantly higher than inspected tickets. Contrary to some findings in the literature participants also correctly predicted these valuation differences in a hypothetical situation, both for themselves as well as for others. Furthermore, our results suggest that regret rather than loss aversion may be the source of the endowment effect in an experimental setting using lottery tickets. Applying our procedure to a setting employing riskless objects in form of mugs revealed rather ambiguous results, thus emphasizing that the role of regret might be less prominent in non-lottery settings.
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Affiliation(s)
| | - Anton Kühberger
- Department of Psychology, University of Salzburg, Austria
- Center of Neurocognitive Research, University of Salzburg, Austria
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Votinov M, Aso T, Koganemaru S, Fukuyama H, Mima T. Transcranial direct current stimulation changes human endowment effect. Neurosci Res 2013; 76:251-6. [PMID: 23751446 DOI: 10.1016/j.neures.2013.05.007] [Citation(s) in RCA: 7] [Impact Index Per Article: 0.6] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 01/18/2013] [Revised: 05/23/2013] [Accepted: 05/30/2013] [Indexed: 11/30/2022]
Abstract
To test whether the right inferior frontal gyrus (IFG) plays role in the endowment effect, we investigated the effects of transcranial direct current stimulation (tDCS) of the right IFG on the willingness to accept/willingness to pay (WTA/WTP) discrepancy. Twelve healthy subjects underwent anodal, cathodal and sham tDCS on separate days. Stimulation was applied over the right IFG for 20min at 2mA. Subjects participated in the pricing task where they evaluated the presented items under WTA and WTP framings during tDCS intervention. The results showed that the WTA/WTP ratio after anodal tDCS was significantly higher than that after cathodal one. In addition, we found that the reaction time during the cathodal tDCS condition was significantly longer compared to those during anodal or sham tDCS conditions. Our findings suggest the functional relevance of the right IFG for producing endowment effect.
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Affiliation(s)
- Mikhail Votinov
- Human Brain Research Center, Kyoto University Graduate School of Medicine, Kyoto 606-8507, Japan.
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Brosnan SF, Jones OD, Gardner M, Lambeth SP, Schapiro SJ. Evolution and the expression of biases: situational value changes the endowment effect in chimpanzees. EVOL HUM BEHAV 2012; 33:378-386. [PMID: 25419111 DOI: 10.1016/j.evolhumbehav.2011.11.009] [Citation(s) in RCA: 24] [Impact Index Per Article: 2.0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/18/2022]
Abstract
Cognitive and behavioral biases, which are widespread among humans, have recently been demonstrated in other primates, suggesting a common origin. Here we examine whether the expression of one shared bias, the endowment effect, varies as a function of context. We tested whether objects lacking inherent value elicited a stronger endowment effect (or preference for keeping the object) in a context in which the objects had immediate instrumental value for obtaining valuable resources (food). Chimpanzee subjects had opportunities to trade tools when food was not present, visible but unobtainable, and obtainable using the tools. We found that the endowment effect for these tools existed only when they were immediately useful, showing that the effect varies as a function of context-specific utility. Such context-specific variation suggests that the variation seen in some human biases may trace predictably to behaviors that evolved to maximize gains in specific circumstances.
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Affiliation(s)
- Sarah F Brosnan
- Department of Psychology & Neuroscience Institute, Georgia State University ; Keeling Center for Comparative Medicine and Research, UTMD Anderson Cancer Center
| | - Owen D Jones
- School of Law and Department of Biological Sciences, Vanderbilt University
| | - Molly Gardner
- Keeling Center for Comparative Medicine and Research, UTMD Anderson Cancer Center
| | - Susan P Lambeth
- Keeling Center for Comparative Medicine and Research, UTMD Anderson Cancer Center
| | - Steven J Schapiro
- Keeling Center for Comparative Medicine and Research, UTMD Anderson Cancer Center
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