Criticisms of The Endowment Effect
Some economists have questioned the effect's existence. Hanemann (1991) noted that economic theory only suggests that WTP and WTA should be equal for goods which are close substitutes, so observed differences in these measures for goods such as environmental resources and personal health can be explained without reference to an endowment effect. Shogren, et al. (1994) noted that the experimental technique used by Kahneman and Thaler (1990) to demonstrate the endowment effect created a situation of artificial scarcity. They performed a more robust experiment with the same goods used by Kahneman and Thaler (chocolate bars and mugs) and found little evidence of the endowment effect. Others have argued that the use of hypothetical questions and experiments involving small amounts of money tells us little about actual behavior (e.g. Hoffman and Spitzer, 1993, p. 69, n. 23 ) with some research supporting these points (e.g. Kahneman, Knetsch and Thaler, 1990, Harless, 1989) and others not (e.g. Knez, Smith and Williams, 1985)
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