Game Form Misconceptions Do Not Explain the Endowment Effect

31 Pages Posted: 11 Dec 2014

See all articles by Björn Bartling

Björn Bartling

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Florian Engl

University of Regensburg - Department of Economics and Econometrics; CESifo (Center for Economic Studies and Ifo Institute)

Roberto A. Weber

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: November 30, 2014

Abstract

We test the claim that game form misconception among subjects making choices through the Becker-DeGroot-Marschak (BDM) value elicitation procedure provides an explanation for the endowment effect, as suggested by Cason and Plott (forthcoming). We employ a design that allows us to clearly identify whether subjects comprehend the incentive properties of a price-list version of the BDM procedure. We find a robust endowment effect, even among those subjects whose elicited valuations for a known monetary value and whose ability to calculate the payoffs resulting from their choices indicate no misconception of the task. We conclude that game form misconceptions alone are unlikely to account for behavioral patterns like the endowment effect.

Keywords: endowment effect, game form misconception, BDM mechanism, experimental methods, replicable audio files of instructions

JEL Classification: C910, D030

Suggested Citation

Bartling, Björn and Engl, Florian and Weber, Roberto A., Game Form Misconceptions Do Not Explain the Endowment Effect (November 30, 2014). CESifo Working Paper Series No. 5094, Available at SSRN: https://ssrn.com/abstract=2536297 or http://dx.doi.org/10.2139/ssrn.2536297

Björn Bartling (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Florian Engl

University of Regensburg - Department of Economics and Econometrics ( email )

Universitaetsstrasse 31
D-93040 Regensburg
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Roberto A. Weber

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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