Author granted license

Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International

Document Type


Publication Date





American Economic Association




We conduct experiments to explore the possibility that subject misconceptions, as opposed to a particular theory of preferences referred to as the "endowment effect," account for reported gaps between willingness to pay ("WTP") and willingness to accept ("WTA"). Two facts are evident in the literature. First, there is no consensus regarding the nature or robustness of the WTA-WTP gap. Secondly, while experimenters are very concerned to avoid subject misconceptions, there is no consensus about the fundamental properties of misconceptions or how they might be avoided. Instead, experimenters have revealed different conceptions of the phenomena through different types of experimental procedures and controls. Such controls involve the role of anonymity, elicitation mechanisms, practice and training applied separately or in different combinations. The resulting pattern of research leaves open the possibility that the widely differing reports of a gap between WTP and WTA could be due to an incomplete science regarding subject misconceptions. The lack of a theory of misconceptions is replaced by what we will call a revealed theory methodology in which theories implicit in experimental procedures found in the literature are at the heart of the new experimental design. Thus, the approach reported here reflects an attempt to simultaneously control for all dimensions of concern found in the literature. To this end our procedures modify the Becker-DeGroot-Marschak mechanism used in previous studies to elicit values. In addition, our procedures supplement commonly used procedures by providing extensive training on the elicitation mechanism before subjects provide WTP and WTA responses. Experiments were conducted using both lotteries and mugs, goods frequently used in endowment effect experiments. Using the modified procedures, we find no support for the hypothesis that WTA is significantly greater than WTP. In addition, we find no support that an observed gap can be convincingly interpreted as an endowment effect and conclude that further evidence is required before convincing interpretations of any observed gap can be advanced.


Reprinted in New Developments in Experimental Economics 5, Enrica Carbone & Chris Starmer, eds., Edward Elgar (2007); Experimental Law and Economics, Jennifer Arlen & Eric Talley, eds., Edward Elgar (2008); Valuing Environment and Natural Resources 530, Kenneth G. Willis & Guy Garrod, eds., Edward Elgar (2012)

Find on SSRN

Included in

Law Commons



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.