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Title: Does exerting effort lead to endowment effect?
Authors: Choudhury, Shreya Roy
Kim, Min Ki
Chang, Ming Yin (張明因)
Yeh, Yun Ting (葉蘊葶)
Hsu, Chien Jui (徐千蕊)
Jung, Yang Sik (鄭壤植)
Department: Department of Economics and Finance
Issue Date: 2016
Course: EF4485 Experimental Methods in Economics/Finance
Programme: Bachelor of Business Administration (Honours) in Business Economics
Supervisor: Dr. Li, King King
Citation: Choudhury, S. R., Kim, M. K., Chang, M. Y., Yeh, Y. T., Hsu, C. J., & Jung, Y. S. (2016). Does exerting effort lead to endowment effect? (Outstanding Academic Papers by Students (OAPS)). Retrieved from City University of Hong Kong, CityU Institutional Repository.
Abstract: In this study, we examined the relationship between effort exerted and endowment effect. We conducted this experiment within two separate groups of people in order to test whether endowment effect exists within subjects without having any effort put and compared the degree of endowment effect exhibited with the subjects who were required to exert effort. The experiment is designed through modifying the original experiment conducted by Knetsch (1989) by using coffee mug and chocolate bar for our experiment. Our study found that there is a positive relationship between endowment effect and effort exerted by our subjects and it also revealed that the effect was higher in females compared to males. The association between endowment effect and effort can be attributed to people's inherent tendency to be loss averse. The relationship between effort put and loss aversion can be explained using the attachment theory and effort justification theory in social psychology. Therefore, our findings not only provide an important insight for explaining economic anomalies, but also testify a theory in social psychology using an economic method.
Appears in Collections:OAPS - Dept. of Economics & Finance

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