Title

The Effect of Initial Endowments in Experimental Auctions

Document Type

Article

Publication Date

5-1-2006

Abstract

We report the results of an experiment designed to test whether initial endowments affect value estimates elicited from experimental auctions. Comparing bids for one unit of a good, two units of a good, and a second unit of a good when endowed with the first unit, we find that willingness to pay for the second unit of a good is, on average, as much as 75% higher when endowed with the first unit. We go on to advance two theories that could potentially reconcile our results with neoclassical consumer theory.

Journal

American Journal of Agricultural Economics

Volume

88

Issue

2

First Page

448

Last Page

457