TRADING WINE - ON THE ENDOWMENT EFFECT, LOSS AVERSION, AND THE COMPARABILITY OF CONSUMER-GOODS

In the present article we argue that the extent to which potential tra ders are susceptible to the endowment effect, is related to the compar ability of the to be traded goods. This hypothesis was tested in an ex perimental market in which participants endowed with a bottle of wine were offered the opportunity to trade their wine for another wine. Res ults of our study support the hypothesis, and corroborate the generali zation that the endowment effect is a manifestation of loss aversion. (C) 1998 Elsevier Science B.V. All rights reserved.