"Experimental Tests of the Endowment Effect" - Kahnemann, Knetsch and Thaler (1990)

The endowment effect is the idea that people generally place more value on items they possess than on the same items that they don’t possess. Kahnemann, Knetsch and Thaler (1990) conducted an experiment to test the validity of this effect. Participants were randomly assigned to either receive either mugs or pens and asked to set prices at which they would sell or buy them. Results showed that the prices people set when they owned the item was significantly higher than when they did not own the item, indicating the presence of the endowment effect. The experiment also showed that a person’s willingness to pay for an item is higher than their willingness to accept in exchange for the item, emphasizing the presence of the endowment effect in economic decision making.