I think what it shows is that subjects can be trained to overcome the endowment effect (if it exists)
Then what do you make of the fact that other experiments have failed to show a WTP-WTA gap? (See section I of the paper).
This was also after the trading mechanism was explained to them at some length with examples, which may have prompted them to think more strategically or otherwise think more like a trader than normal or gotten them to learn how to actually obtain good payoffs.
The endowment effect is a hypothesis about how much an item is valued when you own it vs. when you don’t own it, not a hypothesis about how people act given those values. So when you say:
That said, maybe those parts were reasonable
I certainly think they are. Ensuring that the subjects are behaving optimally given their values just ensures that the subjects actions are accurate indicators of their values.
As far as I understand the endowment effect, this little procedure would indeed completely (approximately) eliminate it on its own, because both sets of subjects would be (about) equally attached to the mugs at that point. If they ever discussed why they did that, I did not see it. Maybe all the other experiments also did this (I haven’t read the papers) and still found a difference! But I really doubt it.
Time to update! See section II. The authors first replicate a design by Kahneman, Knetsch and Thaler in 1990 (KKT) which allowed both buyers and sellers to inspect the mug and had a WTP-WTA gap. Plott and Zeiler replicate that gap.
Time to update! See section II. The authors first replicate a design by Kahneman, Knetsch and Thaler in 1990 (KKT) which allowed both buyers and sellers to inspect the mug and had a WTP-WTA gap. Plott and Zeiler replicate that gap.
Checking section II and looking up what I think is the right paper, they did indeed replicate correctly. However, while replicating: “One-half of the subjects were given mugs and were referred to as ‘sellers.’ The remaining subjects were referred to as ‘buyers’ and received no mugs. Buyers were allowed to inspect the mug of the seller sitting next to them”. Note that this does nothing to remove my objection (and strengthens it slightly, since it shows that the original experiment did a different procedure) - in the scenario that replicated the endowment effect successfully, the buyers never got to hold mugs, while in the one that did not, they got to hold mugs and were then asked if they want to pay to keep them.
Then what do you make of the fact that other experiments have failed to show a WTP-WTA gap? (See section I of the paper).
Who knows! Maybe their sample was skewed. Maybe they used all philosophy majors at some university where they all turned into existentialists and grew detached from material values and consequently didn’t care about endowments (or all microecon grad students attempting to be homo economicus). Or maybe there was some unlisted confounding factor in their experimental design. Either way, from the table, there are clearly experiments with very similar designs that produced ~opposite outcomes, so something must have gone wrong somewhere. (And given that even in this table there are more papers that find an effect than ones that do not, this vaguely gestures at the idea that there probably is one.)
(My disagreement with your other points, if it exists at all, is small enough to not be worth disputing.)
in the scenario that replicated the endowment effect successfully, the buyers never got to hold mugs, while in the one that did not, they got to hold mugs and were then asked if they want to pay to keep them.
That was not my interpretation of “Buyers were allowed to inspect the mug of the seller sitting next to them.” I’m pretty sure (70%) that this means that buyers were allowed to physically hold the mugs. This, at least, was exactly how we did it in an in-class demonstration of the endowment effect (and indeed the WTP-WTA gap was present).
Hm, all right, well, I’ll update a little, but I’m still not very convinced. It certainly feels a lot more like possession if you’re given a mug directly than if you’re (maybe) given one to inspect. (Thanks for the actual observed example!)
Then what do you make of the fact that other experiments have failed to show a WTP-WTA gap? (See section I of the paper).
The endowment effect is a hypothesis about how much an item is valued when you own it vs. when you don’t own it, not a hypothesis about how people act given those values. So when you say:
I certainly think they are. Ensuring that the subjects are behaving optimally given their values just ensures that the subjects actions are accurate indicators of their values.
Time to update! See section II. The authors first replicate a design by Kahneman, Knetsch and Thaler in 1990 (KKT) which allowed both buyers and sellers to inspect the mug and had a WTP-WTA gap. Plott and Zeiler replicate that gap.
Checking section II and looking up what I think is the right paper, they did indeed replicate correctly. However, while replicating: “One-half of the subjects were given mugs and were referred to as ‘sellers.’ The remaining subjects were referred to as ‘buyers’ and received no mugs. Buyers were allowed to inspect the mug of the seller sitting next to them”. Note that this does nothing to remove my objection (and strengthens it slightly, since it shows that the original experiment did a different procedure) - in the scenario that replicated the endowment effect successfully, the buyers never got to hold mugs, while in the one that did not, they got to hold mugs and were then asked if they want to pay to keep them.
Who knows! Maybe their sample was skewed. Maybe they used all philosophy majors at some university where they all turned into existentialists and grew detached from material values and consequently didn’t care about endowments (or all microecon grad students attempting to be homo economicus). Or maybe there was some unlisted confounding factor in their experimental design. Either way, from the table, there are clearly experiments with very similar designs that produced ~opposite outcomes, so something must have gone wrong somewhere. (And given that even in this table there are more papers that find an effect than ones that do not, this vaguely gestures at the idea that there probably is one.)
(My disagreement with your other points, if it exists at all, is small enough to not be worth disputing.)
That was not my interpretation of “Buyers were allowed to inspect the mug of the seller sitting next to them.” I’m pretty sure (70%) that this means that buyers were allowed to physically hold the mugs. This, at least, was exactly how we did it in an in-class demonstration of the endowment effect (and indeed the WTP-WTA gap was present).
Hm, all right, well, I’ll update a little, but I’m still not very convinced. It certainly feels a lot more like possession if you’re given a mug directly than if you’re (maybe) given one to inspect. (Thanks for the actual observed example!)