Debunking True Purchase Price Limits in Teenagers
DOI:
https://doi.org/10.47611/jsrhs.v12i3.4766Keywords:
Endowment Effect, Behavioral EconomicsAbstract
This project aims to explore whether or not the endowment effect, a concept in behavioral economics, holds true for adolescents, since this population has not been studied before. The endowment effect occurs when there is a gap between a buyer’s willingness to pay (WTP) and a seller’s willingness to accept (WTA) at a certain price. A WTA:WTP ratio equal to 1 would exhibit traditional economic rationality, and a ratio above 1 would exhibit the endowment effect. This study used survey research in the form of having participants explicit state prices, to investigate how the WTA-WTP discrepancy, a measurement of the endowment effect, varies across economic goods and survey procedure (or how survey questions were worded). The final conclusion that can be drawn from this paper is that high school students exhibit the endowment effect only for durable goods (shoes and electronics), and exhibit the reverse trend of the endowment effect for perishable goods (food and beverage). Additionally, the survey procedure and socioeconomic status were not a contributing factor to the endowment effect. These results, which differ from previous literature regarding the endowment effect, emphasize the increased importance of studying teenage purchasing pricing preferences, compared to prior studies that focused solely on undergraduate business students.
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