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Endowment effect despite the odds
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Walasek, Lukasz, Yu, Erica C. and Lagnado, David A. (2018) Endowment effect despite the odds. Thinking & Reasoning, 24 (1). pp. 79-96. doi:10.1080/13546783.2017.1381163 ISSN 1354-6783.
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Official URL: https://doi.org/10.1080/13546783.2017.1381163
Abstract
Can ownership status influence probability judgments under condition of uncertainty? In three experiments, we presented our participants with a recording of a real horse race. We endowed half of our sample with a wager on a single horse to win the race, and the other half with money to spend to acquire the same wager. As the race progressed, participants were asked to update their buying or selling prices, and to estimate the probability that a given horse will win the race. Across three large studies (N = 750), we found the endowment effect – owners demanded significantly more for the wager than buyers were willing to pay to acquire it. However, we also found that probability estimates of each horse winning the race did not differ between owners and non-owners of the betting slip, despite the fact that the only information participants should use to inform their valuation is the strength of their belief that each horse will win the race. Our results demonstrate that distorted perception of probability is unlikely to be a mechanism explaining the endowment effect.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HB Economic Theory S Agriculture > SF Animal culture |
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Divisions: | Faculty of Science, Engineering and Medicine > Engineering > WMG (Formerly the Warwick Manufacturing Group) | ||||||||
Library of Congress Subject Headings (LCSH): | Loss aversion, Horse racing -- Betting, Probabilities | ||||||||
Journal or Publication Title: | Thinking & Reasoning | ||||||||
Publisher: | Psychology Press | ||||||||
ISSN: | 1354-6783 | ||||||||
Official Date: | 2018 | ||||||||
Dates: |
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Volume: | 24 | ||||||||
Number: | 1 | ||||||||
Page Range: | pp. 79-96 | ||||||||
DOI: | 10.1080/13546783.2017.1381163 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 18 September 2017 | ||||||||
Date of first compliant Open Access: | 4 October 2018 | ||||||||
RIOXX Funder/Project Grant: |
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