Value judgments about information and its value are vital for a functioning information society. Subjective valuations, formulated by individuals determine the demand for information and trading in it. Theoretically, these subjective value determinations should be influenced by ownership rights, a phenomenon coined the "Endowment Effect" in psychological study of trading situations. This study examines the Endowment Effect in the context of evaluating information. In a simple computer simulated game fifty five participants conducted a task in which they were provided opportunities to buy or sell information. The bidding mechanism was incentive compatible. Results show that, in agreement with Endowment Effect theory, people value information they own much more than information not owned by them. Our findings indicate that the ratio between Willingness to Accept (WTA) and Willingness to Purchase (WTP) for information is similar to that for market goods, and as with market goods, other than rational. Participants exhibited a strong inclination to purchase but not to sell information even though profit data suggests that the use of information had no objective benefit for profit-making. This preference is attributed to risk aversion rather than to loss aversion which is the most widely-accepted explanation of the Endowment Effect. Holding on to information and undertrade in it have strong implications for the information society.
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