The Effect of Initial Endowments in Experimental Auctions
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.
Corrigan, Jay R. and Rousu, Matthew C., "The Effect of Initial Endowments in Experimental Auctions" (2006). American Journal of Agricultural Economics 88(2): 448-457. Faculty Publications. Paper 46.
American Journal of Agricultural Economics