The Role of Anticipated Regret in the Endowment Effect

EXTENDED ABSTRACT - Numerous studies have demonstrated that people persistently demand more money to give up one object than they’re willing to pay to purchase the same object (e.g. Kahnman, Knetsch, and Thaler 1990; Knetsch 1989). This violation of economic norms, commonly known as the endowment effect, is generally explained by loss aversion, the fact that pain from loss exceeds the happiness from acquisition. However, existing literature devoted little attention to the emotional experience individuals have in determining an acceptable price for purchasing or selling an item. This research sets to explore the role of anticipated feelings of regret in creating the persistent disparity between individuals’ willingness to pay (WTP) and willingness to accept (WTA). We propose that people anticipate intense regret if their decisions to buy or sell later turn out bad, and therefore set extreme threshold to both buying and selling to avoid possible regret.



Citation:

Ying Zhang and Ayelet Fishbach (2005) ,"The Role of Anticipated Regret in the Endowment Effect", in NA - Advances in Consumer Research Volume 32, eds. Geeta Menon and Akshay R. Rao, Duluth, MN : Association for Consumer Research, Pages: 66-66.

Authors

Ying Zhang, University of Chicago
Ayelet Fishbach, University of Chicago



Volume

NA - Advances in Consumer Research Volume 32 | 2005



Share Proceeding

Featured papers

See More

Featured

The Price of a Threat: How Social Identity Threat Influences Price Sensitivity

Jorge Rodrigues JACOB, Brazilian School of Public and Business Administration, Brazil
Yan Vieites, Brazilian School of Public and Business Administration, Brazil
Eduardo B. Andrade, FGV / EBAPE
Rafael Burstein Goldszmidt, Brazilian School of Public and Business Administration, Brazil

Read More

Featured

Attention to missing information: The effect of novel disclosure methods

Nikolos M Gurney, Carnegie Mellon University, USA
George Loewenstein, Carnegie Mellon University, USA

Read More

Featured

L13. The Recipient Effect on Consumers’ Preference for Products Displayed in Different Horizontal Locations

Sheng Bi, Washington State University, USA
Nik Nikolov, Washington State University, USA
Julio Sevilla, University of Georgia, USA

Read More

Engage with Us

Becoming an Association for Consumer Research member is simple. Membership in ACR is relatively inexpensive, but brings significant benefits to its members.