Buying and selling exchange goods: Outcome information, curiosity and the endowment effect

The endowment effect refers to the phenomenon that people demand more money to give up an object then they are willing to pay to receive the same object. Kahneman, Knetsch and Thaler (1991) [The endowment effect, loss aversion and status quo effect. Journal of Economic Perspectives, 5, 193-206] stated that this effect would not apply to exchange goods. Research by Van Dijk and Van Knippenberg (1996) [Buying and selling exchange goods: Loss aversion and the endowment effect. Journal of Economic Psychology, 17, 517-524] showed that the endowment effect does occur, but only for exchange goods of which the value is uncertain. The present research continues this exploration, and shows that curiosity contributes to the observed disparity between selling and buying prices for exchange goods with uncertain value. Furthermore, the findings suggest that in order to understand endowment effects, a closer study of the behavior of the non-owners may provide useful insights.