To trade or not to trade: The moderating role of vividness when exchanging gambles

Michal Maimaran*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

Individuals are generally reluctant to trade goods-a phenomenon identified as the endowment effect. This paper focuses on consumers' puzzling reluctance to exchange gambles, and in particular lottery tickets with identical distribution (i.e., same odds of winning), and identifies the ticket's vividness as an important moderator. Three studies demonstrate that individuals are more willing to exchange less vivid lottery tickets (e.g., tickets concealed in envelopes, or tickets with an unknown number) compared to more vivid tickets (e.g., tickets not concealed in envelopes, or tickets with a known number) when offered an incentive to exchange. Moreover, this effect is mediated by anticipated regret, such that less regret is anticipated when exchanging less vivid tickets, thus increasing individuals' willingness to exchange tickets.

Original languageEnglish (US)
Pages (from-to)147-155
Number of pages9
JournalJudgment and Decision Making
Volume6
Issue number2
StatePublished - Feb 1 2011

Keywords

  • Endowment effect
  • Exchange
  • Gambles
  • Loss aversion
  • Regret
  • Vividness

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Applied Psychology
  • Economics and Econometrics

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