Endowment Effect As Inertia Equity in Brand Switching

Gewei Ye, Towson University
Curtis Haugtvedt, Ohio State University
Fred Van Raaij, Tilburg University
Little research has investigated the behavioral aspect of brand inertia in brand switching based on behavioral decision theory. The present research employs endowment effect to conceptualize the inertia element of brand switching (e.g., from brand A to B). Past research normally separately assesses consumers’ willingness to accept (WTA) to give up brand A and the willingness to pay (WTP) to acquire brand B. The effect postulates that the WTA is normally larger than the WTP. The present research proposes a joint assessment of the endowment effect in brand switching. It uses the price reduction (i.e., inertia equity) that just overcomes brand inertia to measure the difference between WTA and WTP. Empirical evidence demonstrates the conceptualization of endowment effect as inertia equity.
[ to cite ]:
Gewei Ye, Curtis Haugtvedt, and Fred Van Raaij (2007) ,"Endowment Effect As Inertia Equity in Brand Switching", in NA - Advances in Consumer Research Volume 34, eds. Gavan Fitzsimons and Vicki Morwitz, Duluth, MN : Association for Consumer Research, Pages: 329-477.