Reconsidering the effect of market experience on the “endowment effect”

0351612 - NHÚ 2011 RIV GB eng J - Journal Article
Engelmann, Dirk - Hollard, G.
Reconsidering the effect of market experience on the “endowment effect”.
Econometrica. Roč. 78, č. 6 (2010), s. 2005-2019. ISSN 0012-9682. E-ISSN 1468-0262
Institutional research plan: CEZ:AV0Z70850503
Keywords : endowment effect * exchange asymmetry * market experience
Subject RIV: AH - Economics
Impact factor: 3.185, year: 2010

Simple exchange experiments have revealed that participants trade their endowment less frequently than standard demand theory would predict. List (2003a) found that the most experienced dealers acting in a well functioning market are not subject to this exchange asymmetry, suggesting that a significant amount of market experience is required to overcome it. To understand this market-experience effect, we introduce a distinction between two types of uncertainty—choice uncertainty and trade uncertainty—both of which could lead to exchange asymmetry. We conjecture that trade uncertainty is most important for exchange asymmetry. To test this conjecture, we design an experiment where the two treatments impact differently on trade uncertainty, while controlling for choice uncertainty.
Permanent Link: http://hdl.handle.net/11104/0191325