Possession, Feelings of Ownership and the Endowment Effect

Judgment and Decision Making, Vol. 2, No. 2, April 2007, pp. 107–114

Possession, feelings of ownership and the endowment effect

Jochen Reb∗ Terry Connolly Singapore Management University University of Arizona

Abstract

Research in judgment and decision making generally ignores the distinction between factual and subjective feelings of ownership, tacitly assuming that the two correspond closely. The present research suggests that this assumption might be usefully reexamined. In two experiments on the endowment effect we examine the role of subjective ownership by independently manipulating factual ownership (i.e., what participants were told about ownership) and physical possession of an object. This allowed us to disentangle the effects of these two factors, which are typically confounded. We found a signiﬁcant effect of possession, but not of factual ownership, on monetary valuation of the object. Moreover, this effect was mediated by participants’ feelings of ownership, which were enhanced by the physical possession of the object. Thus, the endowment effect did not rely on factual ownership per se but was the result of subjective feelings of ownership induced by possession of the object. It is these feelings of ownership that appeared to lead individuals to include the object into their endowment and to shift their reference point accordingly. Potential implications and directions for future research are discussed. Keywords: decision making; endowment effect; possession; psychological ownership, subjective ownership.

1 Introduction of losing it is seen as a (relatively large) loss. If one does not, the prospect of acquiring it is seen as a (rela- Thaler (1980) presented half the students in a class with tively small) gain. Hence the small volume of trading in Cornell University coffee mugs and then allowed them Thaler’s study: The endowment shifted reference points, to trade with their less fortunate classmates. Surprisingly and thus the assessment of what is a loss and what a gain. little trading occurred. Those holding the mugs set their More recently, researchers have started to examine in minimum selling prices too high, and those without mugs more detail the psychological mechanisms driving the ef- set their maximum offers too low, for many trades to fect. For example, Strahilevitz and Loewenstein (1998) clear. Apparently, briefly owning a coffee mug raised its found that valuation of an object can increase with dura- value to the owner sufficiently to price it beyond the reach tion of ownership, possibly due to increased adaptation, of most non-owners. Thaler coined the term endowment the psychological accustoming to the new material situ- effect to describe the result: goods that are included in ation. Novemsky and Kahneman (2005a, b) present ev- one’s endowment — that is, goods that one owns — are idence that loss aversion, and thus an endowment effect, valued more highly than identical goods not held in the is found for goods that are owned for consumption, but endowment. The non-owner’s potential gain from acqui- not for goods that are owned for exchange, and that are sition was apparently smaller than the owner’s potential thus given up “as intended” rather than as losses from an loss from sale. The effect has since been widely repli- endowment. Carmon and Ariely (2000) report findings cated (e.g., Kahneman, Knetsch, & Thaler, 1990; Kahne- suggesting that endowment effects can be explained as man, Knetsch, & Thaler, 1991). the result of buyers and sellers having different cognitive The endowment effect is commonly interpreted as the perspectives on the exchange. These results suggest that result of loss aversion, a core ingredient of prospect the- there is more to the endowment effect than simple factual ory (Kahneman & Tversky, 1979). Losses (outcomes ownership of an object. below some reference point) are weighted substantially In the present research, we try to elucidate further what more than gains (outcomes above the reference point) leads to the development of a sense of endowment and, in the evaluation of choice options (Kahneman & Tver- subsequently, to higher monetary valuations. The con- sky, 1984). If one initially owns an object, the prospect cept of ownership of one’s endowment of goods appears to involve two elements, legal entitlement and subjective ∗We would like to thank Nidhi Chaudhry, Rashimah Binte Rajah, ownership. These elements may be imperfectly corre- Chintan Rastogi, Harsh Saxena, Malavika Shanker, Dionne Soriano, lated. One may feel some sense of ownership of items and Shangbin Xie for help with data collection and entry. Address: one does not own (e.g., a borrowed bicycle) and behave Jochen Reb, Lee Kong Chian School of Business, Singapore Man- agement University, 50 Stamford Road, Singapore 178899. E-mail: as an owner might (e.g., resenting the owner’s demand for [email protected]. its return). Conversely, one may feel little ownership of

107 Judgment and Decision Making, Vol. 2, No. 2, April 2007 Possession, ownership and the endowment effect 108

items one does, in fact, own (e.g., a newly-bought com- sign. The object to be evaluated was a chocolate bar of puter) and require some period of experience and use be- a brand familiar to the participants. We assessed mone- fore feeling full ownership. Pierce, Kostova and Dirks tary valuations as our dependent variable and feelings of (2003) propose an elaborate psychological model, based ownership as a potential mediator. on an extensive literature review, of the antecedents, ex- Participants in the Possession condition were given the periences, and consequences of psychological or subjec- chocolate bar before participating in an unrelated study tive ownership (see Belk, 1988; Dittmar, 1992; Furby, that took about 30 minutes. They were handed the choco- 1978). This research suggests that subjective feelings late bar and told to keep it for now (and not to eat it) as of ownership are more complex than simple legal enti- it would be used later on in the study; they then placed tlement (Etzioni, 1991). In the Pierce et al model feel- it on the desk next to their computers. In the No Pos- ings of ownership are induced by controlling the en- session condition participants were shown the chocolate tity (e.g., through possession), becoming familiar with it bar only after participating in the unrelated study. They (e.g., through actual or imagined use) and/or investing the were not given possession of the item and they had no self into it (e.g., through identification). physical contact with it. After completing the unrelated In Thaler (1980), as in most studies of the endow- study participants in the Ownership condition were told ment effect, two of these elements of ownership are con- that they now owned a chocolate bar (either the one on founded. It seems clear that the students who received their desk or one just like the one they had been shown) the mugs understood that they legally owned them and and that they could either keep it or exchange it for some could, if they wished, sell them to others. They also were money. Those in the No Ownership condition were told given physical possession of the mugs and could inspect that they now had a choice of receiving either a chocolate and control them. The extent to which these elements bar or some money. All participants then completed a re- led to feelings of subjective ownership is unclear. Pos- sponse sheet which presented a series of choices between session alone, even in the absence of factual ownership, the chocolate bar and amounts of money rising from $.10 can induce feelings of ownership (Etzioni, 1991; Furby, to $4.00 in steps of 10 cents. Respondents indicated their 1980). Indeed, because of the immediate control it pro- preference at each money amount. (All money amounts vides over the entity, possession might be more psycho- were given in the local currency, Singapore dollars, worth logically salient and have a stronger effect on feelings of at the time about .60 $US.) ownership of an object (and thus on its monetary eval- The experiment thus compares the preferences of the uation) than does factual ownership (Pierce et al., 2003; following groups: those who own a chocolate bar but Rudmin & Berry, 1987). may, if they wish, exchange it for money; and those who In the following two experiments we examine the rel- do not own a bar but are offered a choice of either ac- ative contributions of factual and subjective ownership to quiring one or receiving a sum of money.1 At the time of the endowment effect by separately manipulating factual making this choice half the participants had possessed the ownership and possession of an object. This design al- bar in the sense that they had received it from the experi- lows examining whether the endowment effect is driven menter and placed it on their desks for about 15–30 min- by (a) factual ownership, (2) possession, or (3) both. We utes. The other participants had not had this prior posses- expect that possession will induce stronger feelings of sion. As in previous studies (e.g., Strahilevitz & Loewen- ownership than pure factual ownership as such. We are stein, 1998) incentive compatibility was maintained by arguing that it is this subjective sense of endowment — telling the participants that the experimenter had previ- rather than a legal entitlement — that leads to a shift in ously written down an amount of money and that partic- the reference point and makes not having the object feel 1 like a loss, rather than a foregone gain. As a result pos- This method of assessing respondents’ valuation of an object from their responses to a series of hypothetical choices between the item and session will lead to higher monetary evaluation, whereas differing sums of money has been used in a number of endowment ef- factual ownership by itself will not. fect studies (e.g., Kahneman et al., 1991; Lerner, Small, & Loewen- stein, 2004) in which potential sellers (those initially given the object) were compared not to potential buyers (those not given the object) but to “choosers”, who were offered choices such as those described above be- 2 Experiment 1 tween the object and different sums of money. For current purposes, the choice-based method has a number of advantages over other commonly- 2.1 Method used measures such as Willingness to Pay (WTP) and Willingness to Accept (WTA), which are prone to extreme responses (since they have 2.1.1 Design, procedure, manipulations, and mea- no natural upper bound) and may be distorted if respondents interpret them as opening bids in a bargaining session rather than as final low- sures est or highest prices. Prices realized in actual market transactions may be influenced by the particular market mechanism imposed (e.g., open The experiment had a 2 (Ownership vs. No Ownership) outcry, sealed bid, second price, etc.) and are, again, only imperfectly x 2 (Possession vs. No Possession) between-subjects de- related to individual valuations. Judgment and Decision Making, Vol. 2, No. 2, April 2007 Possession, ownership and the endowment effect 109

ipants would receive either money or the chocolate bar one who neither owns nor possesses it. When comparing depending on the choice they had indicated on their re- these two cells of our experiment we found a significant 2 sponse sheet for this amount. Thus both under-bidders effect, F(1, 47) = 4.83, p < .05, prep = .90, ω = .07. Those and over-bidders faced the risk of receiving their less- who were endowed with the object (i.e., owned and pos- preferred option. Only honest valuations escape this con- sessed it) gave higher monetary valuations, M = $1.79 cern. (SD = .96), than those who were not endowed with the All participants in a given session received the same object (i.e., neither owned nor possessed it), M = $1.29 possession treatment to rule out possible social compari- (SD = .55). Thus, the endowment effect was replicated.2 son effects between participants. Each session included about 8 of the 99 participants, and sessions alternated 2.2.2 The relative roles of factual ownership and between Possession and No Possession conditions. Par- possession in the endowment effect ticipants indicated their valuations on the response sheet and then responded to additional questions including (1) Was the endowment effect due to factual ownership of the a measure of feelings of ownership (“How much do you object, possession, or both? A 2 (Ownership) x 2 (Pos- feel like you own the chocolate bar (even if you don’t session) ANOVA showed a significant main effect only 2 legally own it)?”) and (2) a measure of information about for possession, F(1, 95) = 5.10, p < .05, prep = .92, ω the object (“How much information do you think you = .04 (see Figure 1). Participants gave the chocolate bar have in order to evaluate the chocolate bar?”), both on a higher monetary value when they had possessed it (M 7-point scales. The experimenter then revealed his pre- = $1.72, SD = .92) than when they had not possessed it set valuation, and participants either kept or received a (M = $1.35, SD = .66). The effect of actual ownership chocolate bar or were given the amount of money (and was not significant (ownership, M = 1.60, SD = .88, no had to return the chocolate bar), depending on the choice ownership, M = 1.47, SD = .76), F(1, 95) = .64, ns, prep they had indicated on their response sheets. = .56, ω2 = .00, and there was no evidence of a signifi- 2 cant interaction, F(1, 95) = .00, ns, prep = .12, ω = .00. 2.1.2 Participants These results suggest that the differences in valuation that constitute the endowment effect were induced by posses- Ninety-nine undergraduate students at a Singaporean uni- sion, and subsequent feelings of ownership, rather than versity participated as part of a larger experiment ses- by ownership of the focal object as such. sion in exchange for course credit and task payoffs as described above. Possession Possession No Possession No Possession 2.1.3 Stimulus pretest One might be concerned that the experimental manipulations of ownership and possession are confounded with

the information participants received about the object, Monetary valuation which could affect monetary valuation. However, given that a chocolate bar is a simple and familiar object we did 0.0 0.5 1.0 1.5 2.0 not anticipate any differences between experimental con- Ownership No Ownership ditions in the amount of product information participants Figure 1: Effects of factual ownership and possession on had. Participants’ self-ratings confirmed this. Judgments monetary valuation, Experiment 1. (Error bars indicate of whether they had sufficient information to evaluate the ±1 standard error of the mean.) chocolate bar (average rating of M = 4.16, (SD = 2.03), on a 1–7 scale with higher values indicating more information) showed no significant difference between the two 2 2.2.3 The Role of Feelings of Ownership possession conditions, F(1, 90) = 1.57, ns, prep = .72, ω = .01, or between the two ownership conditions, F(1, 90) We next examined the possible mediating role of subjec- 2 = = .40, ns, prep = .48, ω .00. tive feelings of ownership in linking possession to valuation. A 2 (Ownership) x 2 (Possession) ANOVA revealed 2.2 Results and discussion a significant effect of possession on subjective ownership. As predicted, participants who had the chocolate bar in 2.2.1 Replication of endowment effect their possession felt stronger ownership (M = 4.34, SD

The typical endowment effect experiment compares an 2The selling-price/choice-price ratio of 1.39 is typical in magnitude individual who both owns and possesses the object with (e.g., in Lerner et al., 2004, it was 1.30). Judgment and Decision Making, Vol. 2, No. 2, April 2007 Possession, ownership and the endowment effect 110

= 2.13) than those who did not (M = 2.60, SD = 1.86), dure, design, and materials were identical to Experiment 2 F(1, 90) = 17.75, p < .001, prep = .999, ω = .15, (see Fig- 1 except for the differences noted below. ure 2). As with valuations, we found no effect of factual One purpose of Experiment 2 was to see if the results 2 ownership, F(1, 90) = .09, ns, prep = .30, ω = .00, and no would replicate with a different object. For this exper- 2 significant interaction F(1, 90) = .94, ns, prep = .62, ω = iment, we chose the object that has probably been used .00. most commonly in endowment effect studies: a coffee Feelings of ownership, in turn, predicted monetary mug from the participants’ university. This object was valuations. Regressing monetary valuations on feelings rather different from the chocolate bar used in Experi- of ownership showed that stronger feelings of owner- ment 1, being more durable, non-hedonic, and of higher ship were related to higher monetary valuations, B = .12, price. To accommodate for the higher value, the new re- SE(B) = .04, β = .33, t(92) = 3.35, p < .01, adjusted R2 sponse sheet gave amounts of money rising from $.20 to = .10. In order to test for mediation, we regressed par- $8.00 in steps of 20 cents. ticipants’ monetary valuations on both the experimental In Experiment 1 the duration of possession and the du- manipulation of possession and the presumed mediator ration of ownership were unequal: participants in the Pos- (feelings of ownership). Results showed that feelings of session condition had the chocolate bar in their posses- ownership continued to predict monetary valuation, β = sion for about 15–30 minutes, while those in the Own- .29, t(90) = 2.64, p < .05, whereas the experimental ma- ership condition only learned that they owned the item nipulation did not, β = .11, t(90) = .99, p = .32, ns.A shortly before giving their valuations. This difference in Sobel test of mediation was significant, z = 2.24, p < .05. duration may have exaggerated the effect of possession Thus, we found that feelings of ownership fully mediated relative to that of ownership, pitting “possession for a sig- the effect of possessing the chocolate bar on the monetary nificant period of time” against “ownership for a brief pe- valuation of the item. riod”. In Experiment 2, duration of possession and duration of ownership were equal (and short). As participants sat down at individual cubicles for the experiment, they were given a questionnaire explaining the study and the

Possession condition they were in, and containing the valuation mea- Possession sures. All participants were shown an example mug, and those in the Possession condition received the object at No Possession No Possession this time. After brief verbal instructions, all participants proceeded to give their valuations. The elapsed time from

Feelings of ownership receiving experimental instructions to completing the valuation measures was thus only a minute or two, in both 1 2 3 4 5 6 7 Possession and Ownership conditions. Ownership No Ownership Experiment 1 relied on a single dependent measure, the Figure 2: Effects of factual ownership and possession on monetary value at which the participant’s choice switched feelings of ownership, Experiment 1. from the object to a sum of money. In Experiment 2, we added a second measure that asked participants to provide In sum, Experiment 1 indicates that the sense of en- willingness to accept (WTA) prices (for those in the Own- dowment that leads to higher monetary valuations results ership condition) and willingness to pay (WTP) prices from the feelings of ownership induced by possessing an (for those in the No Ownership condition). Participants object, rather than legal ownership as such. Experiment 2 were asked “What is the minimum amount of money you provides a conceptual replication, extending the first ex- are willing to accept for the coffee mug?” (WTA, Own- periment to (a) a different object of choice, (b) an alterna- ership condition), or “What is the maximum amount of tive measure of the dependent measure, and (c) a differ- money you are willing to pay for the coffee mug?” (WTP, ent, and briefer, implementation of the concept of “pos- No Ownership condition). We will refer to the first set of session.” values as “choice values,” to the second as “WTA/WTP.” In contrast to the choice values, which were re- stricted by the response sheet to be between $0 and $8, 3 Experiment 2 WTA/WTP ratings were made in a free response format, opening the possibility of extreme values that might un- Experiment 2 was designed to provide a conceptual repli- duly affect the analyses. Inspecting the responses re- cation of the findings of Experiment 1. The design was vealed only one value that was markedly different ($20) again a 2 (Ownership vs. No Ownership) x 2 (Possession from the rest and double the next highest value ($10 for vs. No Possession) between-subjects design. The proce- two respondents). We Winsorized this value to the next Judgment and Decision Making, Vol. 2, No. 2, April 2007 Possession, ownership and the endowment effect 111

2 highest ($10) (see Peters, Slovic, & Gregory, 2003 for a F(1, 46) = 4.37, p < .05, prep = .89, ω = .06. Thus, the similar approach). endowment effect was again replicated.3 Finally, in Experiment 1 the Possession and No Posses- sion conditions were conducted separately. This had the 3.2.2 The relative roles of factual ownership and advantage of avoiding possible social comparison effects possession in the endowment effect between those who received the mug and those who did not. However, this procedure had the disadvantage of not Choice values. A 2 (Ownership) x 2 (Possession) allowing for random assignment to one of the four exper- ANOVA showed a significant main effect only for pos- 2 imental cells. Thus, in Experiment 2, we ran all four cells session, F(1, 91) = 5.13, p < .05, prep = .92, ω = .04 of the experiment at the same time, allowing for better (see Figure 3). Participants gave the coffee mug a higher random assignment of participants to experimental condi- monetary value when they possessed it (M = $3.84, SD = tions. We minimized potential social comparison effects .2.03) than when they did not possess it (M = $3.00, SD by seating participants in individual cubicles. = 1.50). The effect of actual ownership was not significant (ownership, M = 3.58, SD = 1.96, no ownership, M 2 = 3.30, SD = 1.73), F(1, 91) = .60, ns, prep = .54, ω = 3.1 Method .00, and there was no evidence of a significant interac- 2 3.1.1 Participants tion, F(1, 91) = .77, ns, prep = .58, ω = .00. These results replicate the findings of Experiment 1 that the differences Ninety-six business undergraduate students at a Singa- in valuation that constitute the endowment effect were in- porean university participated as part of a larger exper- duced by possession rather than by factual ownership of iment session in exchange for course credit and task pay- the focal object. offs as described in Experiment 1. Only Singaporean students were allowed to participate as foreign exchange students might perceive and value the university coffee mug Possession systematically different. Possession No Possession No Possession 3.1.2 Stimulus Pretest As in Experiment 1, we assessed participants’ judgments of whether they had sufficient information to evaluate the coffee mug (average rating of M = 3.64, SD = 1.84, on a 1–7 scale with higher values indicating more informa- 0 1 2 3 4

tion). These ratings showed no signiﬁcant difference be- Monetary valuation (choice values) tween the two possession conditions, F(1, 92) = 3.38, ns Ownership No Ownership 2 (p = .07), prep = .85, ω = .02, or between the two owner- Figure 3: Effects of factual ownership and possession on 2 = ship conditions, F(1, 92) = 1.23, ns, prep = .67, ω .00. choice values, Experiment 2.

3.2 Results and discussion WTA/WTP. The same analysis on the WTA/WTP mea- 3.2.1 Replication of endowment effect sure yielded the same substantive results: a main effect of As in Experiment 1, we first tested for a difference in val- possession (possession, M = 4.01, SD = 2.29, no posses- uation between (1) those who owned and possessed the sion, M = 3.18, SD = 1.66), F(1, 92) = 4.10, p < .05, prep object and (2) those who neither owned nor possessed it. = .88, ω2 = .03. The effect of actual ownership was not When comparing these two cells of our experiment, we significant (ownership, M = 3.85, SD = 2.18, no owner- found a significant effect on the choice measure, F(1, 46) ship, M = 3.37, SD = 1.90), F(1, 92) = 1.45, ns, prep = 2 2 = 4.13, p < .05, prep = .88, ω = .06. Those endowed .70, ω = .01, and there was no evidence of a significant 2 with the object (i.e., owned and possessed it) gave higher interaction, F(1, 92) = .69, ns, prep = .57, ω = .00. monetary valuations, M = $3.82 (SD = 2.28), than those not endowed (i.e., neither owned nor possessed it), M = 3.2.3 The Role of Feelings of Ownership $2.70 (SD = 1.44). The same effect materialized with the alternative, WTP/WTA dependent measure such that We next examined again the possible mediating role of those who owned and possessed the object (M = 4.08, subjective feelings of ownership in linking possession to SD = 2.61) gave higher valuations than those who nei- 3 The selling-price/choice-price ratio (1.41) is highly similar to that ther owned nor possessed the it (M = 2.76, SD = 1.64), of Experiment 1 (1.39). Judgment and Decision Making, Vol. 2, No. 2, April 2007 Possession, ownership and the endowment effect 112

Possession Possession No Possession 4 General Discussion No Possession In two endowment effect experiments, we independently manipulated factual ownership and possession of an object (a chocolate bar in Experiment 1 and a university coffee mug in Experiment 2). This allowed us to disentangle the effects of these two factors, which are typically con- 0 1 2 3 4

Monetary valuation (WTA/WTP) founded — sellers generally both own and possess the Ownership No Ownership object from the outset, while buyers or choosers neither own nor possess it. We found a significant effect of pos- Figure 4: Effects of Factual Ownership and Possession session, but no significant effect of factual ownership, on on WTA/WTP, Experiment 2 monetary valuation of the objects, both on choice values (Experiment 1 and 2) and traditional WTA/WTP values (Experiment 2). These results suggest that while the en- valuation. A 2 (Ownership) x 2 (Possession) ANOVA dowment effect can be “turned on” in the typical fashion, revealed a significant effect of possession on subjective it can be “turned off” in one of two ways. First, it can be ownership. As predicted, participants who had the cof- turned off by taking the good away from both sellers and fee mug in their possession felt stronger ownership (M = buyers (no possession). Second, it can be given to both 3.54, SD = 1.79) than those who did not (M = 2.48, SD 2 sellers and buyers (possession). These results help to clar- = 1.48), F(1, 92) = 9.94, p < .01, prep = .98, ω = .09, ify the antecedents of the endowment effect and suggest (see Figure 4). As with valuations, we found no effect of 2 an important role of the subjective sense of ownership in factual ownership, F(1, 92) = .63, ns, prep = .55, ω = .00, decision making. and no significant interaction F(1, 92) = .08, ns, p = rep The results suggest that the endowment effect may .29, ω2 = .00. be primarily driven by subjective feelings of ownership Stronger feelings of ownership, in turn, led to higher rather than by factual ownership as such. In other words, monetary valuations, B = .46, SE(B) = .10, β = .43, t(93) it may require the development of a subjective sense of = 4.59, p < .001, adjusted R2 = .18. In order to test for me- endowment, rather than a legal entitlement, for the ref- diation, we regressed participants’ choice values on both erence point to shift. Once the reference point is shifted, the experimental manipulation of possession and the pre- loss aversion sets in and leads to higher valuations. In our sumed mediator (feelings of ownership). Results showed experiments, this shift seems to have been triggered by that feelings of ownership continued to predict monetary possession, not factual ownership. Thus, it appears that valuation, β = .40, t(92) = 4.01, p < .001, whereas the participants in the possession condition felt that not hav- experimental manipulation did not, β = .11, t(92) = 1.06, ing the object would be a loss, rather than a foregone gain p = .29, ns. A Sobel test of mediation was significant, z = — counterfactually to their objective state of no owner- 2.49, p < .05. Thus, we found that feelings of ownership ship in the possession/no-ownership condition. On the fully mediated the effect of possessing the coffee mug on other side, participants in the no possession condition felt the monetary valuation of the item.4 that not having the object would be a foregone gain, rather than a loss — again counterfactually to their objective state of ownership in the no-possession/ownership condition. Possession This interpretation is consistent with the results of the Possession mediation analyses. In both experiments, we found the No Possession No Possession effect of possession on monetary valuation to be com- pletely mediated by participants’ rated feelings of own- Feelings of ownership ership, which were enhanced by the physical posses- 1 2 3 4 5 6 7 sion of the object (briefly in Experiment 2, for a sig- Ownership No Ownership nificant period of time in Experiment 1). The results of these mediation analyses should be interpreted cau- Figure 5: Effects of factual ownership and possession on tiously, however, due the inherent shortcomings in obser- feelings of ownership, Experiment 2. vational/correlational approaches such as mediation analyses (Spencer, Zanna, & Fong, 2005) and because of a potential influence of the monetary valuations partici- 4The same substantive results were obtained for WTA/WTP as dependent measures. For reasons of brevity, the analyses are omitted, but pants provided before indicating their subjective feelings can be obtained from the first author. of ownership. Judgment and Decision Making, Vol. 2, No. 2, April 2007 Possession, ownership and the endowment effect 113

The present research contributes to a growing liter- Journal of Consumer Research, 15, 139–168. ature on the psychological mechanisms behind the en- Carmon, Z., & Ariely, D. (2000). Focusing on the for- dowment effect (e.g., Carmon & Ariely, 2000; Novem- gone: How value can appear so different to buyers and sky & Kahneman, 2005a,b) and may help explain several sellers. Journal of Consumer Research, 27, 360–370. past ﬁndings. For example, Strahilevitz and Loewenstein Carmon, Z., Wertenbroch, K., & Zeelenberg, M. (2003). (1998) found that valuation of an object increased with Pre-choice attachment to the alternatives: When the duration of ownership. It is possible that over time, choosing feels like losing. Journal of Consumer Re- owners’ feelings of ownership increased, thus leading to search, 30, 15–29. higher valuations. Lerner, Small, & Loewenstein (2004) Dittmar, H. (1992). The social psychology of material found that owners’ selling prices of an object decreased possessions. 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