Experimental Economics

, Volume 4, Issue 3, pp 257–269

The Endowment Effect and Repeated Market Trials: Is the Vickrey Auction Demand Revealing?

  • Jack L. Knetsch
  • Fang-Fang Tang
  • Richard H. Thaler

DOI: 10.1023/A:1013221421382

Cite this article as:
Knetsch, J.L., Tang, FF. & Thaler, R.H. Experimental Economics (2001) 4: 257. doi:10.1023/A:1013221421382


The difference between people's valuations of gains and losses has been widely observed in both single trial and repeated trial experiments, as well as in survey responses and in commonplace behavior. However, the results of some Vickrey auction experiments indicate that the disparity may decrease, or even disappear, over repeated trials. This paper reports the results of two further repeated Vickrey auction experiments that test the impact of both a second price and a ninth price auction rule on valuations. Although valuations should be independent of this variation in the exchange price rule, the manipulation had a dramatic impact on subjects' stated values of a common market good. The results suggest that the endowment effect remains robust over repeated trials, and that contrary to common understanding, the Vickrey auction may elicit differing demands dependent on the context of the valuation.

endowment effect learning Vickrey auctions 

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Jack L. Knetsch
    • 1
  • Fang-Fang Tang
    • 2
  • Richard H. Thaler
    • 3
  1. 1.Department of EconomicsSimon Fraser UniversityBurnabyCanada
  2. 2.Faculty of Business AdministrationChinese University of Hong KongShatinHong Kong
  3. 3.Graduate School of BusinessUniversity of ChicagoChicagoUSA

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