- Email: [email protected]
Endowment effect for hedonic but not utilitarian goods
IJRM-01094; No of Pages 4
Available online at www.sciencedirect.com
ScienceDirect Intern. J. of Research in Marketing xx (2015) xxx – xxx www.elsevier.com/locate/ijresmar
Full Length Article
Endowment effect for hedonic but not utilitarian goods Eugene Y. Chan ⁎ UTS Business School, University of Technology Sydney, P. O. Box 123, Broadway, NSW 2007, Australia First received on April 21, 2015 and was under review for 1 month Available online xxxx Area Editor: John G. Lynch
Abstract This research proposes that the WTA–WTP disparity between sellers and buyers in the endowment effect can be understood in terms of sellers' emotional attachment to the endowed item. Consistent with this hypothesis and how affective considerations are more diagnostic for hedonic than utilitarian goods, the results of an experiment indicate that the pricing disparity occurs primarily for hedonic goods. This finding explains many of the moderators that have been proffered for the endowment effect. © 2015 Elsevier B.V. All rights reserved.
1. Introduction People demand a price for an item they own that is higher than their willingness to pay to acquire the same item they do not own (Kahneman, Knetsch, & Thaler, 1990, 1991). The widely-accepted explanation for the endowment effect is loss aversion (Tversky & Kahneman, 1991). Sellers who forfeit an endowed item experience loss aversion, driving up the prices they demand, and consequently, the disparity between their willingness-to-accept (WTA) and buyers' willingness-to-pay (WTP) for the same item. Ariely, Huber, and Wertenbroch (2005) proposed that emotional attachment to the endowed item can explain sellers' loss aversion and the pricing disparity. This is evidence for this proposition. For example, sellers' emotions influence the endowment effect (Lerner, Small, & Loewenstein, 2004; Martinez, Zeelenberg, & Rijsman, 2011; Zhang & Fishbach, 2005), although these emotions were incidental and not integral to the pricing decision. Positively-valenced items also elicit greater loss aversion than negatively-valenced ones (Brenner, Rottenstreich, Sood, & Bilgin, 2007). Indirectly, sellers' involvement amplifies the WTA–WTP disparity (Saqib, Frohlich, & Bruning, 2010), and emotional reactions are usually intense in high involvement ⁎ Tel.: + 61 2 9514 3538. E-mail address: [email protected].
decisions (Van Boven, Kane, McGraw, & Dale, 2010). Finally, Novemsky and Kahneman (2005) argued that there is no loss aversion for money, and money is affect-poor compared to goods of equivalent value (McGraw, Shafir, & Todorov, 2010). Table 1 summarizes these moderators. These findings suggest that sellers' emotional attachment to the endowed item heightens their perceived loss, driving up the prices they demand. One way to test this would be to manipulate the relevance of sellers' affective considerations in the pricing decision. In particular, affective considerations are typically more diagnostic for hedonic than utilitarian goods (Pham, 1998), especially in forfeiture decisions (Dhar & Wertenbroch, 2000). Thus, if sellers' emotional attachment to the endowed item drives the WTA–WTP disparity in the endowment effect, then the disparity should occur primarily for hedonic goods. This hypothesis was first tested by drawing on a meta-analysis on the endowment effect conducted by Horowitz and McConnell (2002). Each of the 45 studies that the authors included, along with both the median and mean WTA–WTP ratios for each study, was used here. Twenty-three American respondents from Mechanical Turk (mean age of 39.6 years old; 11 men, 12 women) labeled the goods on three 9-point scales with the following endpoints: utilitarian–hedonic, necessity–luxury, and practical–impractical (see Batra & Ahtola, 1991). Only 33 goods were presented as some studies in the meta-analysis used the
http://dx.doi.org/10.1016/j.ijresmar.2015.06.003 0167-8116© 2015 Elsevier B.V. All rights reserved. Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003
2
E.Y. Chan / Intern. J. of Research in Marketing xx (2015) xxx–xxx
Table 1 Select summary of endowment effect moderators. Authors
Moderators
Current research Brenner et al. (2007) Lerner et al. (2004) Martinez et al. (2011) Novemsky and Kahneman (2005) Saqib et al. (2010) Zhang and Fishbach (2005)
Hedonic vs. utilitarian goods. Positively- vs. negatively-valenced items. Specific emotions manipulated incidentally.
Findings
EE occurs for hedonic goods; attenuates for utilitarian ones. EE occurs for positively-valenced items; reverses for negatively-valenced ones. Disgust attenuates EE; sadness reverses it. Regret attenuates EE; disappoint reverses it. Goods vs. money of equivalent value. EE occurs for goods but not money. Involvement in exchange. Sellers' greater involvement heightens EE. Anticipated negative emotions from transaction. Sellers' anticipated negative emotions heighten EE.
same goods. The three scales were averaged (α = .92) to form a single index, with higher scores indicating that the good was perceived to be more hedonic. This index positively correlated with both the median (r = .37, p b .02) and mean ratios (r = .56, p b .001). This suggests that the more that the goods used in previous endowment effect studies were hedonic, the larger the WTA–WTP disparity, supporting the current hypothesis. To test it directly, an experiment was conducted in which the hedonic and utilitarian motivations for the same good were manipulated. 2. Method A total of 125 students from a large North American research university (mean age of 25.4 years old; 40 men, 76 women) completed this experiment for cash payment during the winter term ostensibly as market research for the university's bookstore. Students were led to believe they had the opportunity to participate in an actual transaction in which they would receive either a free sweatshirt (in addition to the cash payment) or the opportunity to buy one with their own money. As part of this pretense, upon entering the laboratory, students were given a university-branded unisex sweatshirt. They were also given a copy of an advertising poster purposely-created for this experiment that included a colored photo of a student wearing the sweatshirt walking around campus, which the bookstore ostensibly created as part of a marketing campaign. Hedonic and utilitarian motivations for wearing the sweatshirt were manipulated. In the hedonic condition, the advertisement read “Show off your university pride in this modern-looking sweatshirt!” to make salient the students' emotional attachment to it. In the utilitarian condition, the advertisement read “Keep yourself warm in this modern-looking sweatshirt!” to highlight its functionality during winter. Students were randomly assigned as sellers or buyers. Sellers were told that the sweatshirt was theirs to keep but had the opportunity to sell it back to the experimenter. They indicated the minimum price they would be willing to accept (WTA). In contrast, buyers were told they had the opportunity to buy the sweatshirt from the experimenter. They indicated the maximum price they would be willing to pay (WTP). After indicating their prices, students indicated how much they liked the sweatshirt on a 0-to-10 scale, where 0 meant “I hate it!” and 10 meant “I love it!” During debriefing, students were informed that the transaction was a deception. A yes–no question asked whether they had
believed during the study that the transaction would actually take place. Three students indicated “no”, but their open-ended responses did not suggest that they deduced the true intent of the study. As such, their results were included in the analyses reported below. Taking out their data did not impact the results. 3. Results 3.1. Prices A 2 (type: hedonic, utilitarian) × 2 (position: seller, buyer) ANOVA on sweatshirt prices revealed no main effects (ps N .11). However, the two-way interaction was significant, F(1, 121) = 4.63, p b .04. For the hedonic sweatshirt, sellers demanded a higher price (M = $46.53, S.D. = $14.82) than buyers were willing to pay (M = $38.23, S.D. = $13.01), t(61) = 2.36, p b .03. In contrast, for the utilitarian sweatshirt, sellers demanded a price (M = $38.38, S.D. = $9.28) that was equal to what buyers were willing to pay (M = $39.61, S.D. = $11.75), p = .65. These findings indicate that the endowment effect occurred for the hedonic but not utilitarian sweater. Fig. 1 presents the WTA and WTP prices. Students’ Prices for Sweatshirt
Fig. 1. Students' prices for sweatshirt.
Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003
E.Y. Chan / Intern. J. of Research in Marketing xx (2015) xxx–xxx
3.2. Liking Students' liking served as a measure of their emotional attachment to the sweatshirt, with greater liking indicating greater emotional attachment to the endowed item for sellers. A 2 × 2 ANOVA revealed a main effect of students' position only, with sellers liking the sweatshirt (M = 7.11, S.D. = 2.00) more than buyers (M = 5.73, S.D. = 2.36), F(1, 121) = 12.35, p b .001. There was neither a main effect of type of good nor an interaction between type and students' position, ps N .25. However, the liking differential was larger in the hedonic (Msellers = 7.41, S.D. = 2.15 vs. Mbuyers = 5.58, S.D. = 2.45, t = 3.15, p b .01, d = .81) than utilitarian condition (Msellers = 6.82, S.D. = 1.85 vs. Mbuyers = 5.89, S.D. = 2.30, t = 1.77, p = .08, d = .45). Thus, sellers of the utilitarian sweatshirt also liked it more than buyers, but the effect was smaller and did not result in a WTA–WTP disparity as with the hedonic one. Fig. 2 presents the results for students' liking of the sweatshirt. 3.3. Mediation Finally, a moderated mediation analysis was conducted with students' position as the independent variable, liking as the presumed mediating variable, price as the dependent variable, and the type of good as the presumed moderating variable (Model 8; Preacher & Hayes, 2008). For the hedonic sweatshirt, the indirect effect was estimated to lie between .23 and 4.81 (5000 samples, 95% C.I.), such that mediation was successful. In contrast, for the utilitarian sweatshirt, the indirect effect was estimated to lie between − 06 and 3.59, such that mediation was not successful. The index of moderated mediation was
Students’ Liking of Sweatshirt
Fig. 2. Students' liking of sweatshirt.
3
marginally significant (90% C.I.: − 3.41 to − .001). Thus, sellers' emotional attachment mediated their prices demanded for the hedonic but not utilitarian sweatshirt. 4. Discussion Sellers' emotional attachment to the endowed item drives the disparity between their WTA and buyers' WTP in the endowment effect. The more that sellers are emotionally attached to the item, the greater their perceived loss, driving up the prices they demand. To be sure, sellers liked both the hedonic and utilitarian sweatshirts more than buyers. However, this does not contradict the crucial finding that the pricing disparity emerges primarily for hedonic goods. Indeed, it is not that sellers have no emotional attachment whatsoever to utilitarian goods, but rather, affective considerations are less diagnostic in these cases (Pham, 1998). Thus, sellers can also be emotionally attached to utilitarian goods, but this is less likely to raise their demanded prices, as the results indicate. This research explains many of the moderators that have been proffered for the endowment effect. However, emotional attachment is not the only explanation for the effect. Ariely et al. (2005) suggested that a change in cognitive perspective for sellers and buyers can also explain it. Both may occur alongside each other. It may be that a change in cognitive perspective might only arise for utilitarian goods, since decisions involving such goods tend to be more reason- and less feeling-based. As the current research focuses on emotional attachment, this possibility is worthy of future study. References Ariely, D., Huber, J., & Wertenbroch, K. (2005). When do losses loom larger than gains? Journal of Marketing Research, 42, 134–138. Batra, R., & Ahtola, O. T. (1991). Measuring the hedonic and utilitarian sources of consumer attitudes. Marketing Letters, 2, 159–170. Brenner, L., Rottenstreich, Y., Sood, S., & Bilgin, B. (2007). On the psychology of loss aversion: Possession, valence, and reversals of the endowment effect. Journal of Consumer Research, 34, 369–376. Dhar, R., & Wertenbroch, K. (2000). Consumer choice between hedonic and utilitarian goods. Journal of Marketing Research, 37, 60–71. Horowitz, J. K., & McConnell, K. E. (2002). A review of WTA/WTP studies. Journal of Environmental Economics and Management, 44, 426–447. Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1990). Experimental tests of the endowment effect and the Coase theorem. Journal of Political Economy, 98, 1325–1348. Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991). Anomalies: The endowment effect, loss aversion, and status quo bias. Journal of Economic Perspectives, 5, 193–206. Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart strings and purse strings: Carryover effects of emotions on economic decisions. Psychological Science, 15, 337–341. Martinez, L. F., Zeelenberg, M., & Rijsman, J. B. (2011). Regret, disappointment and the endowment effect. Journal of Economic Psychology, 32, 962–968. McGraw, A. P., Shafir, E., & Todorov, A. (2010). Valuing money and things: Why a $20 item can be worth more and less than $20. Management Science, 56, 816–830. Novemsky, N., & Kahneman, D. (2005). The boundaries of loss aversion. Journal of Marketing Research, 42, 119–128.
Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003
4
E.Y. Chan / Intern. J. of Research in Marketing xx (2015) xxx–xxx
Pham, M. T. (1998). Representativeness, relevance, and the use of feelings in decision making. Journal of Consumer Research, 25, 144–159. Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40, 879–891. Saqib, N. U., Frohlich, N., & Bruning, E. (2010). The influence of involvement on the endowment effect: The moveable value function. Journal of Consumer Psychology, 20, 355–368.
Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A referencedependent model. Quarterly Journal of Economics, 106, 1039–1061. Van Boven, L., Kane, J., McGraw, A., & Dale, J. (2010). Feeling close: Emotional intensity reduces perceived psychological distance. Journal of Personality and Social Psychology, 98, 872–885. Zhang, Y., & Fishbach, A. (2005). The role of anticipated emotions in the endowment effect. Journal of Consumer Psychology, 15, 316–324.
Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003
Available online at www.sciencedirect.com
ScienceDirect Intern. J. of Research in Marketing xx (2015) xxx – xxx www.elsevier.com/locate/ijresmar
Full Length Article
Endowment effect for hedonic but not utilitarian goods Eugene Y. Chan ⁎ UTS Business School, University of Technology Sydney, P. O. Box 123, Broadway, NSW 2007, Australia First received on April 21, 2015 and was under review for 1 month Available online xxxx Area Editor: John G. Lynch
Abstract This research proposes that the WTA–WTP disparity between sellers and buyers in the endowment effect can be understood in terms of sellers' emotional attachment to the endowed item. Consistent with this hypothesis and how affective considerations are more diagnostic for hedonic than utilitarian goods, the results of an experiment indicate that the pricing disparity occurs primarily for hedonic goods. This finding explains many of the moderators that have been proffered for the endowment effect. © 2015 Elsevier B.V. All rights reserved.
1. Introduction People demand a price for an item they own that is higher than their willingness to pay to acquire the same item they do not own (Kahneman, Knetsch, & Thaler, 1990, 1991). The widely-accepted explanation for the endowment effect is loss aversion (Tversky & Kahneman, 1991). Sellers who forfeit an endowed item experience loss aversion, driving up the prices they demand, and consequently, the disparity between their willingness-to-accept (WTA) and buyers' willingness-to-pay (WTP) for the same item. Ariely, Huber, and Wertenbroch (2005) proposed that emotional attachment to the endowed item can explain sellers' loss aversion and the pricing disparity. This is evidence for this proposition. For example, sellers' emotions influence the endowment effect (Lerner, Small, & Loewenstein, 2004; Martinez, Zeelenberg, & Rijsman, 2011; Zhang & Fishbach, 2005), although these emotions were incidental and not integral to the pricing decision. Positively-valenced items also elicit greater loss aversion than negatively-valenced ones (Brenner, Rottenstreich, Sood, & Bilgin, 2007). Indirectly, sellers' involvement amplifies the WTA–WTP disparity (Saqib, Frohlich, & Bruning, 2010), and emotional reactions are usually intense in high involvement ⁎ Tel.: + 61 2 9514 3538. E-mail address: [email protected].
decisions (Van Boven, Kane, McGraw, & Dale, 2010). Finally, Novemsky and Kahneman (2005) argued that there is no loss aversion for money, and money is affect-poor compared to goods of equivalent value (McGraw, Shafir, & Todorov, 2010). Table 1 summarizes these moderators. These findings suggest that sellers' emotional attachment to the endowed item heightens their perceived loss, driving up the prices they demand. One way to test this would be to manipulate the relevance of sellers' affective considerations in the pricing decision. In particular, affective considerations are typically more diagnostic for hedonic than utilitarian goods (Pham, 1998), especially in forfeiture decisions (Dhar & Wertenbroch, 2000). Thus, if sellers' emotional attachment to the endowed item drives the WTA–WTP disparity in the endowment effect, then the disparity should occur primarily for hedonic goods. This hypothesis was first tested by drawing on a meta-analysis on the endowment effect conducted by Horowitz and McConnell (2002). Each of the 45 studies that the authors included, along with both the median and mean WTA–WTP ratios for each study, was used here. Twenty-three American respondents from Mechanical Turk (mean age of 39.6 years old; 11 men, 12 women) labeled the goods on three 9-point scales with the following endpoints: utilitarian–hedonic, necessity–luxury, and practical–impractical (see Batra & Ahtola, 1991). Only 33 goods were presented as some studies in the meta-analysis used the
http://dx.doi.org/10.1016/j.ijresmar.2015.06.003 0167-8116© 2015 Elsevier B.V. All rights reserved. Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003
2
E.Y. Chan / Intern. J. of Research in Marketing xx (2015) xxx–xxx
Table 1 Select summary of endowment effect moderators. Authors
Moderators
Current research Brenner et al. (2007) Lerner et al. (2004) Martinez et al. (2011) Novemsky and Kahneman (2005) Saqib et al. (2010) Zhang and Fishbach (2005)
Hedonic vs. utilitarian goods. Positively- vs. negatively-valenced items. Specific emotions manipulated incidentally.
Findings
EE occurs for hedonic goods; attenuates for utilitarian ones. EE occurs for positively-valenced items; reverses for negatively-valenced ones. Disgust attenuates EE; sadness reverses it. Regret attenuates EE; disappoint reverses it. Goods vs. money of equivalent value. EE occurs for goods but not money. Involvement in exchange. Sellers' greater involvement heightens EE. Anticipated negative emotions from transaction. Sellers' anticipated negative emotions heighten EE.
same goods. The three scales were averaged (α = .92) to form a single index, with higher scores indicating that the good was perceived to be more hedonic. This index positively correlated with both the median (r = .37, p b .02) and mean ratios (r = .56, p b .001). This suggests that the more that the goods used in previous endowment effect studies were hedonic, the larger the WTA–WTP disparity, supporting the current hypothesis. To test it directly, an experiment was conducted in which the hedonic and utilitarian motivations for the same good were manipulated. 2. Method A total of 125 students from a large North American research university (mean age of 25.4 years old; 40 men, 76 women) completed this experiment for cash payment during the winter term ostensibly as market research for the university's bookstore. Students were led to believe they had the opportunity to participate in an actual transaction in which they would receive either a free sweatshirt (in addition to the cash payment) or the opportunity to buy one with their own money. As part of this pretense, upon entering the laboratory, students were given a university-branded unisex sweatshirt. They were also given a copy of an advertising poster purposely-created for this experiment that included a colored photo of a student wearing the sweatshirt walking around campus, which the bookstore ostensibly created as part of a marketing campaign. Hedonic and utilitarian motivations for wearing the sweatshirt were manipulated. In the hedonic condition, the advertisement read “Show off your university pride in this modern-looking sweatshirt!” to make salient the students' emotional attachment to it. In the utilitarian condition, the advertisement read “Keep yourself warm in this modern-looking sweatshirt!” to highlight its functionality during winter. Students were randomly assigned as sellers or buyers. Sellers were told that the sweatshirt was theirs to keep but had the opportunity to sell it back to the experimenter. They indicated the minimum price they would be willing to accept (WTA). In contrast, buyers were told they had the opportunity to buy the sweatshirt from the experimenter. They indicated the maximum price they would be willing to pay (WTP). After indicating their prices, students indicated how much they liked the sweatshirt on a 0-to-10 scale, where 0 meant “I hate it!” and 10 meant “I love it!” During debriefing, students were informed that the transaction was a deception. A yes–no question asked whether they had
believed during the study that the transaction would actually take place. Three students indicated “no”, but their open-ended responses did not suggest that they deduced the true intent of the study. As such, their results were included in the analyses reported below. Taking out their data did not impact the results. 3. Results 3.1. Prices A 2 (type: hedonic, utilitarian) × 2 (position: seller, buyer) ANOVA on sweatshirt prices revealed no main effects (ps N .11). However, the two-way interaction was significant, F(1, 121) = 4.63, p b .04. For the hedonic sweatshirt, sellers demanded a higher price (M = $46.53, S.D. = $14.82) than buyers were willing to pay (M = $38.23, S.D. = $13.01), t(61) = 2.36, p b .03. In contrast, for the utilitarian sweatshirt, sellers demanded a price (M = $38.38, S.D. = $9.28) that was equal to what buyers were willing to pay (M = $39.61, S.D. = $11.75), p = .65. These findings indicate that the endowment effect occurred for the hedonic but not utilitarian sweater. Fig. 1 presents the WTA and WTP prices. Students’ Prices for Sweatshirt
Fig. 1. Students' prices for sweatshirt.
Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003
E.Y. Chan / Intern. J. of Research in Marketing xx (2015) xxx–xxx
3.2. Liking Students' liking served as a measure of their emotional attachment to the sweatshirt, with greater liking indicating greater emotional attachment to the endowed item for sellers. A 2 × 2 ANOVA revealed a main effect of students' position only, with sellers liking the sweatshirt (M = 7.11, S.D. = 2.00) more than buyers (M = 5.73, S.D. = 2.36), F(1, 121) = 12.35, p b .001. There was neither a main effect of type of good nor an interaction between type and students' position, ps N .25. However, the liking differential was larger in the hedonic (Msellers = 7.41, S.D. = 2.15 vs. Mbuyers = 5.58, S.D. = 2.45, t = 3.15, p b .01, d = .81) than utilitarian condition (Msellers = 6.82, S.D. = 1.85 vs. Mbuyers = 5.89, S.D. = 2.30, t = 1.77, p = .08, d = .45). Thus, sellers of the utilitarian sweatshirt also liked it more than buyers, but the effect was smaller and did not result in a WTA–WTP disparity as with the hedonic one. Fig. 2 presents the results for students' liking of the sweatshirt. 3.3. Mediation Finally, a moderated mediation analysis was conducted with students' position as the independent variable, liking as the presumed mediating variable, price as the dependent variable, and the type of good as the presumed moderating variable (Model 8; Preacher & Hayes, 2008). For the hedonic sweatshirt, the indirect effect was estimated to lie between .23 and 4.81 (5000 samples, 95% C.I.), such that mediation was successful. In contrast, for the utilitarian sweatshirt, the indirect effect was estimated to lie between − 06 and 3.59, such that mediation was not successful. The index of moderated mediation was
Students’ Liking of Sweatshirt
Fig. 2. Students' liking of sweatshirt.
3
marginally significant (90% C.I.: − 3.41 to − .001). Thus, sellers' emotional attachment mediated their prices demanded for the hedonic but not utilitarian sweatshirt. 4. Discussion Sellers' emotional attachment to the endowed item drives the disparity between their WTA and buyers' WTP in the endowment effect. The more that sellers are emotionally attached to the item, the greater their perceived loss, driving up the prices they demand. To be sure, sellers liked both the hedonic and utilitarian sweatshirts more than buyers. However, this does not contradict the crucial finding that the pricing disparity emerges primarily for hedonic goods. Indeed, it is not that sellers have no emotional attachment whatsoever to utilitarian goods, but rather, affective considerations are less diagnostic in these cases (Pham, 1998). Thus, sellers can also be emotionally attached to utilitarian goods, but this is less likely to raise their demanded prices, as the results indicate. This research explains many of the moderators that have been proffered for the endowment effect. However, emotional attachment is not the only explanation for the effect. Ariely et al. (2005) suggested that a change in cognitive perspective for sellers and buyers can also explain it. Both may occur alongside each other. It may be that a change in cognitive perspective might only arise for utilitarian goods, since decisions involving such goods tend to be more reason- and less feeling-based. As the current research focuses on emotional attachment, this possibility is worthy of future study. References Ariely, D., Huber, J., & Wertenbroch, K. (2005). When do losses loom larger than gains? Journal of Marketing Research, 42, 134–138. Batra, R., & Ahtola, O. T. (1991). Measuring the hedonic and utilitarian sources of consumer attitudes. Marketing Letters, 2, 159–170. Brenner, L., Rottenstreich, Y., Sood, S., & Bilgin, B. (2007). On the psychology of loss aversion: Possession, valence, and reversals of the endowment effect. Journal of Consumer Research, 34, 369–376. Dhar, R., & Wertenbroch, K. (2000). Consumer choice between hedonic and utilitarian goods. Journal of Marketing Research, 37, 60–71. Horowitz, J. K., & McConnell, K. E. (2002). A review of WTA/WTP studies. Journal of Environmental Economics and Management, 44, 426–447. Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1990). Experimental tests of the endowment effect and the Coase theorem. Journal of Political Economy, 98, 1325–1348. Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991). Anomalies: The endowment effect, loss aversion, and status quo bias. Journal of Economic Perspectives, 5, 193–206. Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart strings and purse strings: Carryover effects of emotions on economic decisions. Psychological Science, 15, 337–341. Martinez, L. F., Zeelenberg, M., & Rijsman, J. B. (2011). Regret, disappointment and the endowment effect. Journal of Economic Psychology, 32, 962–968. McGraw, A. P., Shafir, E., & Todorov, A. (2010). Valuing money and things: Why a $20 item can be worth more and less than $20. Management Science, 56, 816–830. Novemsky, N., & Kahneman, D. (2005). The boundaries of loss aversion. Journal of Marketing Research, 42, 119–128.
Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003
4
E.Y. Chan / Intern. J. of Research in Marketing xx (2015) xxx–xxx
Pham, M. T. (1998). Representativeness, relevance, and the use of feelings in decision making. Journal of Consumer Research, 25, 144–159. Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40, 879–891. Saqib, N. U., Frohlich, N., & Bruning, E. (2010). The influence of involvement on the endowment effect: The moveable value function. Journal of Consumer Psychology, 20, 355–368.
Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A referencedependent model. Quarterly Journal of Economics, 106, 1039–1061. Van Boven, L., Kane, J., McGraw, A., & Dale, J. (2010). Feeling close: Emotional intensity reduces perceived psychological distance. Journal of Personality and Social Psychology, 98, 872–885. Zhang, Y., & Fishbach, A. (2005). The role of anticipated emotions in the endowment effect. Journal of Consumer Psychology, 15, 316–324.
Please cite this article as: Chan, E.Y., Endowment effect for hedonic but not utilitarian goods, Intern. J. of Research in Marketing (2015), http://dx.doi.org/10.1016/ j.ijresmar.2015.06.003