What We Have and What We Can’t Have: Analyzing the Endowment Effect and Choice Restriction on Consumer Choice

Author

Argent Alija, Skidmore College

Date of Award

2017

Document Type

Restricted Thesis

Degree Name

Bachelor of Arts

Department

Economics

First Advisor

Monica Das

Abstract

Based on the theoretical frame of prospect theory, this paper investigates consumer decision on two forms of loss aversion, the endowment effect and choice restriction (otherwise known as a phantom alternative). This study provides evidence that an endowment effect without actual possession is occurring in coupons and that consumer behavior on choice restriction is consistent with literature on commodity theory. Results indicate that choice restriction and the endowment effect cause preference formation, even when doing so opposes rational choice theory. The competing effects show that the endowment effect dominates the restriction effect.

Comments

Note: Access to this thesis is restricted to Skidmore community.

Recommended Citation

Alija, Argent, "What We Have and What We Can’t Have: Analyzing the Endowment Effect and Choice Restriction on Consumer Choice" (2017). Economics Student Theses and Capstone Projects. 62.
https://creativematter.skidmore.edu/econ_studt_schol/62