Ambiguity aversion and value uncertainty generate an endowment effect Article Swipe
YOU?
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· 2025
· Open Access
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· DOI: https://doi.org/10.1007/s11238-025-10054-y
We show how the endowment effect can be interpreted in terms of ambiguity aversion. Agents take status quo as their reference point, relative to which they evaluate potential trades. The value of exchanged goods is ambiguous, represented by a set of probability distributions over possible values. Agents are ambiguity averse, modeled as maxmin expected utility maximisers. This characteristic leads a seller to focus on the case of selling a high value good and leads a buyer to focus on the case of buying a low value good. Consequently, the seller’s willingness to accept (WTA) is inflated and the buyer’s willingness to pay (WTP) is deflated, producing an endowment effect. Assuming that agents incorporate new information via Bayesian updating of the set of priors, we show that information decreases the WTP-WTA gap. In this way our model can account for the known facts that the endowment effect is mitigated by physical contact with the good, decreasing in experience, larger for non-market goods, and more dependent on possession of the good than on ownership.
Related Topics
- Type
- article
- Language
- en
- Landing Page
- https://doi.org/10.1007/s11238-025-10054-y
- https://link.springer.com/content/pdf/10.1007/s11238-025-10054-y.pdf
- OA Status
- hybrid
- References
- 43
- Related Works
- 10
- OpenAlex ID
- https://openalex.org/W4412176197
Raw OpenAlex JSON
- OpenAlex ID
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https://openalex.org/W4412176197Canonical identifier for this work in OpenAlex
- DOI
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https://doi.org/10.1007/s11238-025-10054-yDigital Object Identifier
- Title
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Ambiguity aversion and value uncertainty generate an endowment effectWork title
- Type
-
articleOpenAlex work type
- Language
-
enPrimary language
- Publication year
-
2025Year of publication
- Publication date
-
2025-07-09Full publication date if available
- Authors
-
Erik Mohlin, Peter GärdenforsList of authors in order
- Landing page
-
https://doi.org/10.1007/s11238-025-10054-yPublisher landing page
- PDF URL
-
https://link.springer.com/content/pdf/10.1007/s11238-025-10054-y.pdfDirect link to full text PDF
- Open access
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YesWhether a free full text is available
- OA status
-
hybridOpen access status per OpenAlex
- OA URL
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https://link.springer.com/content/pdf/10.1007/s11238-025-10054-y.pdfDirect OA link when available
- Concepts
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Ambiguity aversion, Ambiguity, Economics, Value (mathematics), Econometrics, Microeconomics, Endowment effect, Endowment, Mathematical economics, Mathematics, Computer science, Statistics, Political science, Law, Programming languageTop concepts (fields/topics) attached by OpenAlex
- Cited by
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0Total citation count in OpenAlex
- References (count)
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43Number of works referenced by this work
- Related works (count)
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10Other works algorithmically related by OpenAlex
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| abstract_inverted_index.seller | 61 |
| abstract_inverted_index.status | 17 |
| abstract_inverted_index.WTP-WTA | 130 |
| abstract_inverted_index.account | 138 |
| abstract_inverted_index.averse, | 50 |
| abstract_inverted_index.contact | 151 |
| abstract_inverted_index.effect. | 109 |
| abstract_inverted_index.modeled | 51 |
| abstract_inverted_index.priors, | 123 |
| abstract_inverted_index.selling | 68 |
| abstract_inverted_index.trades. | 29 |
| abstract_inverted_index.utility | 55 |
| abstract_inverted_index.values. | 46 |
| abstract_inverted_index.Abstract | 0 |
| abstract_inverted_index.Assuming | 110 |
| abstract_inverted_index.Bayesian | 117 |
| abstract_inverted_index.evaluate | 27 |
| abstract_inverted_index.expected | 54 |
| abstract_inverted_index.inflated | 96 |
| abstract_inverted_index.physical | 150 |
| abstract_inverted_index.possible | 45 |
| abstract_inverted_index.relative | 23 |
| abstract_inverted_index.updating | 118 |
| abstract_inverted_index.ambiguity | 13, 49 |
| abstract_inverted_index.aversion. | 14 |
| abstract_inverted_index.buyer’s | 99 |
| abstract_inverted_index.decreases | 128 |
| abstract_inverted_index.deflated, | 105 |
| abstract_inverted_index.dependent | 164 |
| abstract_inverted_index.endowment | 5, 108, 145 |
| abstract_inverted_index.exchanged | 33 |
| abstract_inverted_index.mitigated | 148 |
| abstract_inverted_index.potential | 28 |
| abstract_inverted_index.producing | 106 |
| abstract_inverted_index.reference | 21 |
| abstract_inverted_index.ambiguous, | 36 |
| abstract_inverted_index.decreasing | 155 |
| abstract_inverted_index.non-market | 160 |
| abstract_inverted_index.ownership. | 172 |
| abstract_inverted_index.possession | 166 |
| abstract_inverted_index.seller’s | 90 |
| abstract_inverted_index.experience, | 157 |
| abstract_inverted_index.incorporate | 113 |
| abstract_inverted_index.information | 115, 127 |
| abstract_inverted_index.interpreted | 9 |
| abstract_inverted_index.maximisers. | 56 |
| abstract_inverted_index.probability | 42 |
| abstract_inverted_index.represented | 37 |
| abstract_inverted_index.willingness | 91, 100 |
| abstract_inverted_index.Consequently, | 88 |
| abstract_inverted_index.distributions | 43 |
| abstract_inverted_index.characteristic | 58 |
| cited_by_percentile_year | |
| countries_distinct_count | 0 |
| institutions_distinct_count | 2 |
| citation_normalized_percentile.value | 0.34186747 |
| citation_normalized_percentile.is_in_top_1_percent | False |
| citation_normalized_percentile.is_in_top_10_percent | False |