Defending Against Loss: Temperamental Fear Predicts Endowment Effect

Rama Ganesan, University of Arizona, USA
Najam Saqib, Ryerson University, Canada
We examine the hypothesis that fear is the underlying mechanism for loss aversion in the endowment effect. In the first study, we relate prices offered and demanded, by subjects assigned the role of buyers and sellers, to the inherent fearfulness of the individual as measured by the Fear Survey Schedule (FSS II). Price demanded by sellers is positively related to temperamental fear, while price offered by buyers is negatively related to temperamental fear. Related constructs such as anxiety or prevention focus had no relationship with the prices elicited. In the second study, we show that the endowment effect under the fear induction condition was significantly greater than under a neutral mood or no fear condition.
[ to cite ]:
Rama Ganesan and Najam Saqib (2010) ,"Defending Against Loss: Temperamental Fear Predicts Endowment Effect", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 107-110 .