The endowment affect is a phenomenon which states that people will value an item more if they have ownership of it. In this experiment, you will be testing the endowment affect as it relates to assessing the value of an item. Two groups of participants will appraise the value of an item. The participants of one group will own the item, while the participants of the other group will be loaned a similar item. Will the two groups assess the items differently?
Collect data by recording values assessed to an object by participants, organize the data in a data table and analyze data for existence of the endowment effect.
Developed by the economist Richard Thaler, the endowment effect (also known as divestiture aversion) states that a person will value a possession more if they own it. They will do more to avoid losing the possession than they would to gain it. Additionally, they will often perceive their possessions as being of greater worth than an equivalent possession that they do not own. The endowment effect has been studied for its impact on economic theory.