Effect of Perceived Benefits on Reluctance to Trade

Abstract

People often tend to be reluctant to trade an owned object for an alternative object. This concept of reluctance to trade is generally called "endowment effect". Loss aversion, which denotes that losses are weighted more heavily than gains, has been applied to interpret the endowment effect. Specifically, no "reluctance to trade" will occur when no loss is involved. In this research, 172 (90 women, 82 men; M age=21 yr., SD= 1.2) and 152 (82 women, 70 men; M age=21 yr., SD= 1.8) undergraduates voluntarily participated in two experiments, respectively. Results of both experiments indicated that participants were willing to trade an owned object for an alternative object when both objects were of the same benefit type and were reluctant to trade when objects were different. Clearly, an exchange was perceived as lower loss when the owned object and the alternative object were of the same benefit type, leading to no reluctance to trade.

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