Endowment In The Perspective Of Biased Information Processing

The endowment effect refers to the fact that the owner of a good(the sel er)evaluates it much more than the one without the good(the buyer)in the transaction.There are many theoretical explanations for the generation of the endowment effect.Among them,Biased Information Processing(BIP)theory suggests that decision makers in different status of endowment have different cognitive framework,and through the query of information that has different valance,they get different results,which in turn affects their valuations of good.In the perspective of BIP,we have explored the dynamic process of how decision makers evaluate goods that have different characters.Experiment 1 uses the mug trying to verify the impact of “the query order” on the valuations.The result has found that the buyer would first consider the negative information of the mug,whereas the seller would give priority to the positive information,hence the price of selling is higher than that of purchasing.But the opposite result was found in the intervention group — the seling price is lower than the purchasing price.In the second experiment,by using the lottery tickets with uncertain income as transaction goods,we examined how Considering Time influenced the prices of the lotteries — the longer Considering Time is,the bigger the gap between the price of selling and of purchasing is.This paper combed through the interpretation of BIP to the valuation construction process of goods,and verify the influence of the Query Order and Considering Time on the endowment effect using the experimental method,trying to provides more cognitive evidence for the generation of the endowment effect.