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Perceived Ownership and Affective Reaction: Emotional Attachment Process Variables and the Endowment Effect

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This research proposes that the concept of emotional attachment, and specifically the independent constructs of psychological ownership and affective reaction, can help explain many of the endowment effect findings documented in the literature. We define these constructs and then test them across a set of nine studies in which we both replicate previous and generate new endowment effect findings, and then show that psychological ownership and affective reaction can mediate the effects. In doing so, we offer direct empirical support for the idea of emotional attachment as a driver of loss aversion while also providing practitioners and future endowment effect researchers with new insights about the psychological processes that underlie the endowment effect.
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Psychological ownership and affective reaction: Emotional attachment
process variables and the endowment effect
Suzanne B. Shu
a,
,1
, Joann Peck
b,1
a
UCLA Anderson School of Management, 110 Westwood Plaza, Los Angeles, CA 90095, USA
b
University of WisconsinMadison School of Business, 3114 Grainger Hall, 975 University Avenue, Madison, WI 53706, USA
Received 21 January 2010; revised 20 January 2011; accepted 28 January 2011
Available online 11 March 2011
Abstract
This research proposes that the concept of emotional attachment, and specifically the independent constructs of psychological ownership and
affective reaction, can help explain many of the endowment effect findings documented in the literature. We define these constructs and then test
them across a set of nine studies in which we both replicate previous and generate new endowment effect findings, and then show that
psychological ownership and affective reaction can mediate the effects. In doing so, we offer direct empirical support for the idea of emotional
attachment as a driver of loss aversion while also providing practitioners and future endowment effect researchers with new insights about the
psychological processes that underlie the endowment effect.
© 2011 Society for Consumer Psychology. Published by Elsevier Inc. All rights reserved.
Keywords: Psychological ownership; Loss aversion; Endowment effect; Affective reaction
The endowment effect, under which consumers' valuation of
an object increases once they have taken ownership of it, has
proven to be a highly robust finding in economics and marketing
for almost thirty years (Kahneman, Knetsch, & Thaler, 1990;
Knetsch & Sinden, 1984; Thaler, 1980). The effect has been
replicated in a variety of settings and with multiple objects,
including lottery tickets, mugs, pens, and chocolate bars. More
recent research on the endowment effect has considered how
other manipulations, such as emotion, object valence, ownership
duration, and changes in cognitive perspective moderate the basic
endowment finding (Brenner, Rottenstreich, Sood, & Bilgin,
2007; Carmon & Ariely, 2000; Lerner, Small, & Loewenstein,
2004; Strahilevitz & Loewenstein, 1998).
It has long been presumed that loss aversion is the primary
driver of the endowment effect; sellers, whose reference point
has been changed due to receipt of the endowed object, feel
stronger loss aversion than buyers (or choosers) who have not
been endowed. The question of what underlies this loss
aversion, particularly as measured through experiments on the
endowment effect, is not clearly understood. A step forward
was provided by Ariely, Huber, and Wertenbroch (2005),
whose paper explored two proposed drivers of loss aversion:
emotional attachment and cognitive perspective. Their survey
of the endowment effect literature is organized around these two
mechanisms for understanding the effect, and they encourage
future researchers to provide a more robust psychological
investigation into these constructs.
Our research supports the concept of emotional attachment
as an explanation for many of the endowment effect findings
documented in the literature and also integrates cognitive
perspective as a moderator of such effects. While Ariely et al.
(2005) suggested a single combined construct, emotional
attachment, we propose and show empirically that this
mechanism is actually two separate constructs: psychological
ownership (attachment) and affective reaction (emotion). As
described in Fig. 1, psychological ownership measures whether
A
vailable online at www.sciencedirect.com
Journal of Consumer Psychology 21 (2011) 439 452
Journal of
CONSUMER
PSYCHOLOGY
Corresponding author. Fax: +1 310 206 7422.
E-mail addresses: suzanne.shu@anderson.ucla.edu (S.B. Shu),
jpeck@bus.wisc.edu (J. Peck).
1
The authors contributed equally to this research. Order of authorship was
determined by random draw.
1057-7408/$ - see front matter © 2011 Society for Consumer Psychology. Published by Elsevier Inc. All rights reserved.
doi:10.1016/j.jcps.2011.01.002
or not a loss is perceived, and is moderated by both actual
ownership and changes in cognitive perspective. Affective
reaction measures the intensity of the loss and is moderated by
affective variables such as mood, valence, or hedonic content.
We review evidence from the literature for each of these
constructs and describe the questions we use to operationalize
them in our studies. We then test them across a set of nine
studies in which we replicate previous endowment effect
findings and show that psychological ownership and affective
reaction can mediate these previous effects. In doing so, we
offer empirical support for the idea of emotional attachment as a
driver of loss aversion, while also providing practitioners with
new insights for increasing endowment in retail settings and
providing future endowment effect researchers with new
measures that can be used to understand the psychological
origins of their effects.
Psychological ownership: Is it a loss?
The ownership that is typically manipulated in the endow-
ment effect literature is legal ownership; in fact, the original
Kahneman et al. (1990) paper was written as a critique of the
Coase Theorem, which dealt directly with issues of legal
ownership and property rights. Ownership is clearly an
important aspect of loss aversion, as without ownership, there
would not be loss. A key aspect of loss aversion is reference
dependence; the object must be integrated into the individual's
endowment so that not having it is seen as a loss. In other words,
the individual must assess is it a loss?before loss aversion
becomes relevant.
In the traditional endowment effect experiments, the reference
point shifts through actual legal ownership. This shift has been
shown to happen almost immediately with receipt of the object and
continues to strengthen over time (Strahilevitz & Loewenstein,
1998). However, recent literature on the endowment effect has
suggested that legal ownership may not be required to get the
effect. For example, anticipatory possession or pseudo-endowment
can have similar psychological effects to legal ownership, even
when the individual does not have legal possession of the
object (Ariely & Simonson, 2003). Carmon, Wertenbroch, and
Zeelenberg (2003) demonstrated through a comprehensive set of
studies that option attachment, generated by prefactual owner-
shipof an option, can be affected by amount of deliberation,
physical proximity, and other manipulations. Psychological
ownership has been explored in other domains as well. Pierce,
Kostova, and Dirks (2001) define it as being characterized by the
feeling that something is mine. Employees in an organization
may develop feelings of ownership towards the organization
(Pierce et al., 2001) and young children may claim ownership of
songs if they hear them first (Isaacs, 1933).
We propose that a measure of psychological (or perceived)
ownership can be used to capture these feelings of ownership,
and that this measure can then be used as a mediator for
valuation. While we believe that legal ownership and
psychological ownership are closely related (i.e., legal owners
will have higher psychological ownership than legal non-
owners), we also believe that psychological ownership and legal
ownership can operate separately from each other. Specifically,
psychological ownership can exist without legal ownership, as
with prefactual ownership or through imagery, touch, or
creative design (Fuchs, Prandelli, & Schreier, 2010; Peck &
Shu, 2009; Reb & Connolly, 2007). In contrast, legal ownership
can operate without psychological ownership when the
reference point is shifted so that the object is no longer part
of the endowment, such as through changes in cognitive
perspective (Johnson, Häubl, & Keinan, 2007; List, 2003). In
these situations, not owningbecomes the reference point, and
giving up the object is no longer seen as a loss. To measure
psychological ownership, we use a three question scale derived
from the psychological ownership measure used by Pierce et al.
(2001). The three questions used to measure psychological
ownership are, I feel a very high degree of personal ownership
Fig. 1. Predicted mediation and moderation relationships.
440 S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
of [the item],”“I feel like I own [the item]and I feel like this is
my [item],each on a seven-point scale anchored by endpoints
strongly disagreeand strongly agree.
Affective reaction: How bad of a loss?
The role of affect in prospect theory, and especially loss
aversion, has attracted significant attention in recent years (see
Rottenstreich & Shu, 2004 for a review). Whether defined as
affect or emotion, an individual's gut feelingstoward an
object have been shown to be an important aspect of how value
is determined. Hsee and Rottenstreich (2004) showed that
valuation of an object can be separated into two psychological
processes, one based on calculation and another based on
feeling. Valuation by feeling is also closely related to the affect
heuristic (Finucane, Alhakami, Slovic, & Johnson, 2000)or
feelings-as-information theories (Schwarz & Clore, 1983).
Schwarz and Clore (1983) argue that people frequently value
an object by asking, How do I feel about this?Such an
approach implies that feelings not related to the object, such as
overall mood, can also affect the resulting valuation. Loss
aversion appears to increase as the emotional aspect of the
decision increases, especially for strongly negative emotions
(Baron, 1986; Luce, Payne, & Bettman, 1999). Together, these
findings suggest that greater levels of emotion or affect in a
decision have a significant effect on loss aversion. Specifically,
higher affective content can increase the perceived size of a loss,
as the individual asks how bad of a loss is this?Positive or
negative affect associated with the object (Brenner et al., 2007;
Dhar & Wertenbroch, 2000) as well as feelings not directly
related to the object (Lerner et al., 2004) can thus moderate the
size of the endowment effect by changing the amount of pain
associated with the loss.
We propose that affective reaction toward an object is an
important mediator of valuation in the endowment effect. For
example, positive affective reaction toward an object has been
found to mediate the relationship between physical touch and
valuation (Peck & Shu, 2009). Our measurement of affective
reaction toward an object is based on the PANAS scale
(Watson, Clark, & Tellegen, 1988) and variants of this scale
have been used by researchers in marketing (e.g., Murry &
Dacin, 1996). Participants are told, Here is a list of emotional
reactions you may have experienced while evaluating the
product. Please indicate how much you felt each of these
emotional reactions.Nine items on 5-point scales are used to
measure positive affective reactions (interested, moved, capti-
vated, inquiring, delighted, enthusiastic, appealed, satisfied,
amused) and nine items measure negative affective reactions
(puzzled, irritated, annoyed, fed up, bewildered, scared,
nervous, resentful, furious) with endpoints of not at alland
a lot. Since positive and negative affective reactions have
been found to be independent in previous research, we keep
them as separate measures throughout our studies, although we
expect that positive affective reaction is the more powerful
driver for the generally positive items (mugs, chocolate) used in
most endowment effect experiments.
Moderators of psychological ownership and affective reaction
We propose that many of the effects that have been
documented in the endowment effect literature are effects of
increased psychological ownership, increased affective reac-
tion, or both. For example, Ariely et al. (2005) suggested that
changes in cognitive perspective can moderate endowment
effectswe agree with this perspective, and further predict that
cognitive perspective has a significant effect on the psycholog-
ical ownership measure. Manipulations that focus the indivi-
dual's cognitive attention on the positive qualities of the object
will increase attachment as measured through psychological
ownership. Instructions that ask a participant to take the
perspective of an owner, even in the absence of legal ownership,
will also have this effect. Carmon et al. (2003) measured post-
decision discomfort rather than psychological ownership, but
their findings demonstrate that such perspective-taking manip-
ulations increase option attachment. Recent research has found
that psychological ownership can be increased through touch
for objects that are not legally owned (Peck & Shu, 2009; Reb &
Connolly, 2007). Based on these prior findings, we expect that
studies that manipulate length of ownership (Strahilevitz &
Loewenstein, 1998), reasons for selling or keeping an object
including query theory (Johnson et al., 2007) and a focus on the
forgone (Carmon & Ariely, 2000)or market experience in
buying and selling objects (List, 2003) will all affect
psychological ownership.
We predict that increases in affective reaction toward an
object, which increase the affective power of a loss, will also
mediate many endowment effect findings. Affective reaction
could be either a stronger emotional reaction to the object itself
or a carryover of affect from other sources that change one's
feelings toward the object. We expect that studies that
manipulate emotion (Lerner et al., 2004), valence of the
possessed item (Brenner et al., 2007), hedonic vs utilitarian
features (Dhar & Wertenbroch, 2000), and unpleasantness of
touch will all affect affective reaction toward an object. Further,
we expect that most effects will be driven by changes in positive
affective reactions toward the object, but some studies
(particularly those with unpleasant touch or negatively valenced
items) may also have an effect on negative affective reactions. A
summary of these moderators and the mediators through which
they operate is provided in Fig. 1.
Studies of mediators of the endowment effect
A note on methodology
An issue that has regularly come up in the endowment effect
literature is a question of methodologyspecifically, whether
the Becker, DeGroot, and Marshak (1964) procedure (hereafter,
BDM) is the best empirical method for measuring loss aversion
for endowed items. We are agnostic on this particular issue, and
we have taken the approach of using whichever methodology,
BDM or binary choice, has been adopted in the original studies
we are replicating and extending. As a result, both types of
methodology will appear in this paper. Regardless of methodology
441S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
used, mediations are always performed using the same set of
measured variablespsychological ownership and affective
reactionso that the underlying processes can be compared,
even if the direct measures cannot.
Within each study's results section, results are reported using
two sets of analyses. The first set of results analyzes the data
using the same tests and reporting as in the original study, so
that our results can easily be compared to previous findings.
Once replication of the basic effect has been tested, the next
portion of the results includes mediation analyses to see whether
psychological ownership and affective reaction are successful at
mediating the main effects.
Overview of studies
The studies in this paper can be categorized into two
methodological types. The majority of studies are traditional
endowment effect studies, using BDM methodology. Besides
testing a baseline condition of the original endowment effect
(Kahneman et al., 1990), these studies include manipulations of
time of ownership (Strahilevitz & Loewenstein, 1998), query
theory (Johnson et al., 2007), emotions (Lerner et al., 2004), and
unpleasant touch (Peck & Shu, 2009). All of our replications of
these BDM experiments use the same item for buying and
selling: a black Uni-ball Signo pen with a rubber grip, worth
approximately $1.50. All participants in these studies were
drawn from the same large undergraduate subject pool and the
experiments were run within the same two week timeframe so
that differences between particular studies are minimized and
results could be compared. Participants completed the studies in
exchange for course extra credit. No individual participant was
allowed to participate in more than one of these studies.
The second type of studies that we replicate uses binary
choice instead of valuation, consistent with the original
literature from which they were drawn. Most of these studies
are paper and pencil studies with hypothetical outcomes, with
the exception of choice of hedonic vs utilitarian options (Dhar &
Wertenbroch, 2000), for which the actual products were used.
The other binary choice studies include manipulations of
possession loss aversion (Brenner et al., 2007), focus on the
forgone (Carmon & Ariely, 2000), and market experience (List,
2003). For all studies, we use either real choice or hypothetical
scenarios according to what was done in the original study; the
only exception to this rule is the study on market experience
(List, 2003), which uses hypothetical scenarios instead of actual
experienced traders.
In addition to separating the studies according to their
methodology, the studies can be grouped according to our
predictions of which of the two proposed mediators is being
affected by the original manipulation. Our initial study, Study 1,
is a simple replication of the traditional endowment effect
(Kahneman et al., 1990). In this study, we introduce the use of
the new constructs and show that these two measures mediate
the effect of ownership on valuation. Studies 2 through 5 focus
on manipulations that are expected to affect the psychological
ownership measure, including length of ownership, reasons for
selling or keeping the object, and market experience. For these
studies, we expect that psychological ownership will mediate
the effects on valuation. Finally, Studies 6 through 9 focus on
manipulations that are expected to alter individuals' affective
reaction toward the object. We expect that this will occur for
studies that manipulate emotion, valence, hedonic vs utilitarian
features, and unpleasant touch. We further expect that these
changes in affective reaction, either positive or negative, will
mediate valuation.
For each type of study, once the dependent variable of either
price or choice (keep or switch) has been collected, participants
proceeded to a set of questions designed to solicit measures of
psychological ownership and current affective reaction for the
target item.
2
As described earlier, psychological ownership was
measured through a three-item scale and the affective reaction
measure is an 18-item scale designed around the PANAS scale.
In all studies, the three psychological ownership items were
averaged to form one score, the nine positive affective reaction
items were averaged, and the nine negative affective reaction
items were averaged (all α's N.89). To ensure that these
constructs were indeed independent measures, a factor analysis
with varimax rotation was done with the full set of twenty-one
items collected across all nine studies. The factor analysis
confirms that the three psychological ownership items loaded
highly on one factor, the nine positive affective reaction items
loaded highly on the second factor, and the nine negative
affective reaction items loaded highly on the third factor. Based
on the results of this factor analysis, we treat psychological
ownership, positive affective reaction, and negative affective
reaction as independent measures for the remainder of the
paper. These constructs will be the measures with which we test
for mediation of the endowment effect in each of our nine
studies.
Study 1: Baseline endowment effect for pens
The purpose of this first study was to demonstrate the
traditional endowment effect and its relationship between
psychological ownership and affective reaction. We predicted
that ownership would increase both psychological ownership
and positive affective reaction toward the object, and that these
two measures would mediate the effect of seller/chooser role on
valuation. This study also provides a baseline measure of
valuation for the pen used in several of the later studies.
Method
Participants were 67 undergraduate students in a Midwest
business school's introductory marketing classes and completed
the exercise in groups of up to thirty at one time in exchange for
2
As proposed mediators, the psychological ownership and affective reaction
measures could have been collected prior to valuation or choice. They were
collected second for two reasons. First, to keep participants actively engaged in
the BDM buying/selling market, we maintained their focus on the valuation
decision prior to moving on to other measures. Second, since some research has
shown that collecting affect measures can reduce the impact of emotion on later
choice (Keltner, Locke, & Audrain, 1993), we collected affective reaction
measures only after all other questions were completed.
442 S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
course extra credit. Consistent with traditional endowment
effect studies (Kahneman et al., 1990), we divided participants
into sellers and choosers. Participants were told that the
decisions they made to buy and sell in this market would be
completed for real money. The item to be traded, a rubber-grip
pen, was introduced to the participants. Sellers were told that
they own a pen and it is theirs to keep unless they choose to sell
it, while choosers were told that they did not yet own a pen but
would have the option to receive one. They then recorded their
valuations by indicating their willingness to sell or buy the
object at each possible price along a continuum of $0 to $6 (at
$.20 intervals). After completing the remaining questionnaire
items, including the psychological ownership and affective
reaction measures for the pen, final selling prices for the pens
were determined by random draw. This valuation elicitation
process is consistent with Becker et al. (1964) procedures and
was designed to elicit true valuations from the participants.
After the final price was established, all participants left the
experiment with either the pen or cash according to the
decisions they had made during the valuation process.
Results
A summary of main results for this study and all other pen
endowment studies is provided in Table 1. As expected, we find
significantly greater willingness to accept prices among sellers
than willingness to pay prices among choosers, replicating the
basic endowment effect ($2.3 vs $1.67, F(1, 65) = 5.36, p=.02).
We also find that our mediating constructs, psychological
ownership and positive affective reaction, were both greater for
sellers than for choosers (4.69 vs 2.28, F(1, 65) = 45.99, pb.001
for psychological ownership; 3.01 vs 2.40, F(1, 65) = 8.09,
p= .006 for positive affective reaction), as we expe cted. There
was no significant difference in negative affective reaction between
seller/chooser roles as would be expected for a generally positive
item like the pen.
These results are consistent with an emotional attachment
explanation for loss aversion, under which valuation of an
endowed object increases due to increases in both psychological
ownership and affect. To more convincingly assess this
relationship, we ran a series of regressions to test for mediation.
First, the earlier findings were repeated for the main effect of the
chooser/seller role on valuation (ß
role
= .64, t= 2.31, p= .02).
Next, consistent with the results reported earlier, the chooser/
seller role was significantly related to psychological ownership
role
= 2.4, t= 6.78, pb.001), and the chooser/seller role was
significantly related to positive affective reaction toward the
object (ß
role
= .61, t=2.85, p=.006). Next, psychological
ownership and positive affective reaction were both signifi-
cantly related to valuation (ß
po
=.37, t= 6.0, pb.001; ß
aff
= .51,
t= 3.54, p= .001). Finally, a regression was run with valuation
as the dependent variable in which all three variables were
included, and found that the relationship between valuation and
the role conditions became non-significant in the presence of
psychological ownership and affective reaction, suggesting full
mediation (ß
role
=.45, t=1.5, p=.14). Sobel tests further
indicated that psychological ownership (z= 4.58, pb.001) and
affective reaction (z= 2.21, p= .03) were significant mediators
of chooser/seller role condition on valuation. Reverse causality
was also tested by using valuation as the mediator and affective
reaction or psychological ownership as the dependent variable;
the results show that role condition is still significant, so
valuation is not mediating these other constructs. Regressions
were also run in which only one of the two proposed mediating
constructs were included; the ownership role condition
remained marginally significant when either only psychological
ownership or only affective reaction was included. Thus, neither
psychological ownership nor affective reaction were sufficient
on their own to fully mediate valuation; both constructs played
an important role in determining how participants valued the
object.
Study 2: Length of ownership
Our second study was designed to replicate Study 2 of
Strahilevitz and Loewenstein (1998), in which valuation is
increased by increasing length of ownership. We predicted that
an increased duration of ownership would allow the individual to
become more attached to the object, increasing psychological
ownership, and that this change in psychological ownership
would mediate the effects of duration of ownership on valuation.
Table 1
Summary results tablepen valuations.
Study, manipulation Role n Price ($) Psychological
ownership (17)
Positive affective
reaction (15)
Negative affective
reaction (15)
S1: Baseline Chooser 34 1.67 2.28 2.40 1.42
S1: Baseline Seller 33 2.30 4.69 3.01 1.48
S2: Short endowment Seller 36 1.71 3.97 2.74 1.20
S2: Long endowment Seller 35 2.34 4.87 2.75 1.19
S3: Value decreasing query Chooser 30 1.44 2.17 2.68 1.24
S3: Value increasing query Chooser 28 1.89 2.91 2.56 1.27
S6: Disgust Chooser 30 1.67 2.80 2.57 1.56
S6: Disgust Seller 30 1.90 4.32 2.76 1.43
S6: Sadness Chooser 30 2.71 3.21 3.02 1.26
S6: Sadness Seller 29 2.05 4.20 2.54 1.41
S8: Unpleasant touch Chooser 31 .79 1.70 1.87 2.04
S8: Unpleasant touch Sellers 29 .59 3.14 2.02 2.44
443S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
We did not expect longer duration of ownership to have an effect
on affective reaction toward the object.
Method
Participants were 71 undergraduate students in a Midwest
business school's introductory marketing classes. Each partic-
ipant was randomly assigned to either a short endowment or
long endowment condition; all participants were sellers and
were endowed with a pen at the start of the study. Those in the
short condition were given valuation forms and related
questions at the start of a packet of unrelated surveys that
took approximately 30 min to complete. Those in the long
condition saw the same forms and related questions at the end of
the 30 min. Since all subjects remained in the room completing
survey materials for the same amount of time, neither condition
was aware of the other. Final selling prices for the pens were
determined by a random draw, and all participants left the
experiment with either the pen or cash according to the
decisions they had made during the valuation process.
Results
The average minimum selling price for short endowment
participants was significantly lower than the average selling
price for long endowment participants ($1.71 vs $2.34,
F(1, 69) = 5.52, p= .02), replicating the findings of Strahilevitz
and Loewenstein (1998). As predicted, we also found that
psychological ownership was less for short endowment than for
long endowment (3.97 vs 4.87, F(1, 69) = 8.34, p= .005) and
that positive affective reaction toward the pen was unchanged
by longer duration (2.74 vs 2.75, F(1, 69) = 0, p= .98). These
results are also seen in the regressions. We found main effects of
duration length on both valuation (ß
length
= .63, t= 2.35, p= .02)
and psychological ownership (ß
length
= .89, t= 2.89, p= .005),
but not on positive affective reaction. Psychological ownership
was significantly related to valuation (ß
po
=.39, t=4.24,
pb.001), as was positive affective reaction (ß
aff
= .42, t= 2.73,
p= .008). Final ly, a regression was run with valuation as the
dependent variable in which all three variables were included.
We found that the relationship between valuation and the role
conditions became insignificant in the presence of psycholog-
ical ownership and affective reaction, suggesting full mediation
length
= .35, t= 1.40, p= .17). Sobel tests further indicated that
psychological ownership (z= 2.39, p= .02) was a significant
mediator of duration of ownership condition on valuation.
Study 3: Query theory
This study was designed to replicate Johnson et al. (2007)'s
Experiment 3, which induced changes in valuation for an object
based on the order of queries that focused on either value-
increasing or value-decreasing aspects of the object. We
predicted that these queries, by focusing attention on different
aspects of the exchange, would change levels of psychological
ownership among the participants but have no effect on
affective reaction toward the object. By showing that psycho-
logical ownership can change even in the absence of legal
ownership, this study provides evidence that it is capturing an
aspect of the psychological process underlying loss aversion
rather than simply serving as a manipulation check for actual
ownership.
Method
Fifty-eight undergraduates participated in this study. All
participants were choosers (i.e., not endowed with a pen), but all
participants were given the opportunity to see and inspect the
pen for as much time as they needed. Each participant was
randomly assigned to one of two query order conditions: they
were asked to either first generate value-increasing aspects
about the pen followed by value-decreasing aspects, or to
produce the two types of aspects in the reverse order. The
instructions for creating value-increasing aspects were to list
all the reasons why you personally would want to have the pen
rather than the money,while instructions for value-decreasing
aspects were to list all the reasons why you personally would
want to have the money rather than the pen.After listing both
types of aspects, participants recorded their valuation for the
pen and answered the remaining questionnaire items. Final
selling prices for the pens were determined by random draw,
and all participants left the experiment with either the pen or
cash according to the decisions they had made during the
valuation process.
Results
Johnson et al. (2007) found that choosers who first listed
value-increasing aspects had higher valuations than those who
first listed value-decreasing aspects, and we replicated those
results: the mean difference in valuation between the value
increasing and value decreasing conditions was $.45, a 31%
increase. A comparison of the mean price per condition reveals
that the difference is statistically significant ($1.89 vs $1.44,
F(1, 56) = 4.26, p= .04).
We also expected that the query order would affect
psychological ownership among choosers, with those who
had thought first about their reasons for wanting the pen feeling
more ownership than those who thought first about the money,
but we did not expect that query order would affect the affective
reaction measures. As predicted, we found that query order
affected psychological ownership; individuals who started with
value-increasing aspects displayed marginally higher psycho-
logical ownership than those in the reverse order (2.91 vs 2.17,
F(1, 56) = 3.51, p= .07). As expected, we did not find a
significant difference in affective reaction toward the pen (2.56
vs 2.68, F(1, 56) = .34, p= .56). In the regressions, we found a
significant effect of query order on valuation (ß
query
= .45,
t= 2.06, p= .04) and psychological owne rship ( ß
query
= .80,
t= 1.87, p= .07) but not on positive affective reaction. We
also found a significant effect of psychological ownership on
valuation (ß
po
= .20, t= 3.20, p= .002) and of positive affective
reaction on valuation (ß
aff
= .42, t= 3.27, p= .002). A regression
with valuation as the dependent variable in which all three
444 S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
variables were included found that the relationship between
query order and valuation became less significant in the
presence of psychological ownership and affective reaction,
suggesting mediation (ß
query
= .39, t= 1.91, p= .06); psycholog-
ical ownership and positive affective reaction both remained
significant. A Sobel test indicates that psychological ownership
(z= 1.62, p= .10) is a marginally significant mediator of query
condition on valuation.
Study 4: Focus on the forgone
Our next study was designed to replicate Study 4 of Carmon
and Ariely (2000). They found, in a study with NCAA
basketball fans, that attention to the aspects to be forgone in a
trade (either money or tickets) affected buying and selling prices
in predictable ways. More specifically, they suggest that buyers
naturally focus on aspects of expenditure (the money they will
forgo) while sellers naturally focus on the object (the experience
they will forgo), and that forcing each group to focus on the
opposite set of aspects can cause either increased selling prices
through attention to expenditure or increased buying prices
through attention to benefits. We predicted that these changes in
prices occurred through an emphasis on ownership, with
psychological ownership for money (from a focus on
expenditure) or psychological ownership for the tickets (from
a focus on benefits) driving the effects.
Method
This study was run with 125 undergraduate students at a
Midwest school whose basketball team has attended the NCAA
tournament every year for the past ten years. Students were
recruited through their courses and completed the study in
exchange for course extra credit. The object in the study was a
ticket book that provided entry to the three basketball games
that made up the 2009 NCAA Final Four in Detroit; students
were asked to imagine that their school had made it to the Final
Four and they possessed a ticket book. We used a 2 × 2 between
subjects design which manipulated the degree to which
participants attended to the expenditure (attend-$) and/or to
the benefits of possessing a ticket (attend-benefit). In the high-
attention conditions we asked participants to think about and
rate the importance of five reasons related to the experience
(e.g., going to these games would be a unique experience)
and/or five reasons related to the expenditure (e.g., I have
many other uses for this money). Order of reasons was
randomized. After considering these reasons and rating their
agreement with each, participants were asked to indicate the
highest buying price and lowest selling price for a ticket book.
Participants then completed psychological ownership measures
for both money and the tickets, and positive and negative
affective reaction measures for the tickets.
Results
We expected that attention to the benefits of having a ticket
would increase buying prices more than selling prices, and that
attention to the expenditure would increase selling prices more
than buying prices, consistent with the previous findings. We
analyzed the 2 (attend-$)× 2 (attend-benefit) design with a simple
ANOVA, once for buying prices and once for selling prices. As
predicted, selling prices showed a greater effect for attend-$ than
attend-benefit (7.52 vs 1.60) and a main effect for attend-$ (F(1,
122)= 7.52, p= .007) but not for attend-benefit. For buying prices,
we found a greater effect for attend-benefit than for attend-$ (7.9
vs .4) and a main effect for attend-benefit (F(1, 122) = 7.9,
p=.006) but not for attend-$. Thus, we replicate the results of
Carmon and Ariely (2000).
We also expected that the attention manipulations would
affect psychological ownership for either the money (through
attend-$) or the tickets themselves (through attend-benefit), and
that these changes in psychological ownership would be able to
mediate the changes in buying and selling prices. We did not
expect the attention manipulations to affect the affective
reaction measures. Using regressions, we first verified that
attend-$ had a significant effect on selling price (ß
att$
= 81,
t= 2.74, p=.007) and that attend-benefit had a significant effect
on buying prices (ß
attb
= 48.1, t= 2.81, p= .006). Next, for
psychological ownership of the money, we found that attend-$
had a significant effect (ß
att$
= .92, t= 3.05, p= .003) but attend-
benefit did not (ß
attb
= .06, t= .19, p= .85). In contrast, for
psychological ownership of the tickets, attend-$ did not have a
significant effect (ß
att$
=.19, t= .58, p= .56) but attend-bene fit
did (ß
attb
= .75, t= 2.35, p= .02). Both of these patterns were as
expected; a focus on expenditure strengthened feelings of
ownership toward money, but a focus on benefits strengthened
feelings of ownership toward the tickets. What was not
expected, but found in the analysis, was that attend-benefit
also had a significant effect on positive affective reaction
towards the tickets (ß
attb
= .45, t= 2.27, p= .02); no effect was
found for attend-$ (t= .84, p= .40) and no there were no
significant differences between the conditions for negative
affective reaction.
Continuing with the mediation analysis, we found a
significant effect of psychological ownership for money on
both selling prices (ß
po$
= 17.3, t= 2.00, p= .05) and on buying
prices (ß
po$
= 9.74, t= 1.93, p= .06). We also found a significant
effect of psychological ownership for the tickets on both selling
prices (ß
pot
= 20.1, t=2.45, p= .02) and buying prices
pot
= 23.1, t= 5.21, pb.001). Positive affective reaction also
significantly affected selling prices (ß
aff
= 50.8, t= 4.00, pb.001)
and buying prices (ß
aff
= 38.7, t= 5.47, pb.001). A regression of
selling prices with the condition variables (attend-$ and attend-
benefit), psychological ownership for money, psychological
ownership for the tickets, and positive affective reaction for the
tickets showed that the condition effect for attend-$ was partially
mediated (ß
att$
= 63.8, t= 2.18, p= .03) by positive affective
reaction for the tickets (ß
aff
= 46.7, t= 3.46, p= .001) but that
psychological ownership for the money did not achieve
significance, contrary to our predictions. This was surprising,
given that attend-$ had a significant effect on psychological
ownership for money and that psychological ownership for
money had a significant effect on selling prices. A regression of
buying prices with the same set of variables found that the
445S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
condition effects (specifically, attend-benefit) were mediated
attb
= 23.8, t= 1.53, p= .13) by psychological ownership
pot
= 14.8, t= 2.98, p= .004) and positive affective reaction
for the tickets (ß
aff
= 28.6, t= 3.93, pb.001). Sobel tests further
indicated that psychological ownership (z= 2.14, p= .03) and
affective reaction (z= 2.08, p= .04) were signifi cant mediators of
the attend-benefit condition's effect on buying prices.
Study 5: Market experience
Study 5 was designed to mirror the findings of List (2003),
who documented weaker endowment effects for experienced
traders of collectible goods such as sports memorabilia. In
particular, he found that willingness to trade an endowed object
was higher for individuals with more trading experience. We
predicted that experienced traders, because they perceive the
good as an object for exchange rather than a possession, would
feel less ownership toward the object. In contrast, novice traders
have not yet developed this strong exchange concept, and would
be more likely to treat an exciting new good as an actual
possession.
Method
Fifty-nine undergraduates completed a paper and pencil
survey in exchange for course extra credit. List (2003)
conducted his experiments with real traders at a sports card
show, using actual goods (a game stub and a dated
commemoration certificate); level of experience was measured
per individual. In contrast, we manipulate level of experience by
asking participants to imagine either that they are an
experienced trader of baseball cardswho has been collecting
cards and trading them for both fun and profitfor many years,
or that they have just recently started trading baseball cards
and that so far you have mostly been collecting cards, but you
hope to start trading them for both fun and profit.Participants
were then told to imagine that they were at a sport card show
and had received a game stub (described to match the actual
stub used in the original experiment) in exchange for
completing a survey. They were then asked about psychological
ownership and their willingness to trade the stub (measured on a
1 to 7 scale). While our manipulation of experience lacks the
external validity of List's experiments, we anticipated that
simply having participants adopt the mindset of either an
experienced or novice trader would be enough to change their
psychological ownership toward the object, and this change in
psychological ownership could mediate the willingness to trade
measure.
Results
Consistent with the findings of List (2003), we found that
participants who were asked to imagine that they were experienced
traders had a greater willingness to trade than participants who were
asked to imagine that they were novices (4.8 vs 3.8, F(1, 57) = 5.77,
p=.02). We also found, consistent with our predictions, that
psychological ownership was lower for experienced traders than
for novices (3.15 vs 4.55, F(1, 57) = 13.92, pb.001). Using
regressions to test mediation, we confirmed that experience had a
significant effect on both willingness to trade (ß
exp
=1.0, t=2.4,
p= .02) and psychological ownership (ß
exp
=1.4,t=3.73,pb.001),
and that psychological ownership had a significant effect on
willingness to trade (ß
po
=.62, t=5.58, pb.001). When both
psychological ownership and experience were included in the
regression on willingness to trade, experience became non-
significant (ß
exp
=.17, t=.42, p=.70) while psychological
ownership remained significant (ß
po
=.60, t=4.78, pb.001),
suggesting mediation. A Sobel test further confirms that
psychological ownership (z=3.08, p=.002) was a significant
mediator of the effect of experience on willingness to trade.
Study 6: Emotion
Lerner et al. (2004) found that the specific emotions of
sadness and disgust could affect buying and selling prices for
endowed objects. Feelings of disgust generated by an unrelated
task carried over to the endowment task, where they reduced
valuation by both sellers and choosers. Sadness also carried
over to valuation, but had a separate effect: it created a reverse
endowmentwhere sellers reduce their valuation but choosers
increased their valuation in an apparent attempt to change
circumstances by acquiring a new possession. We predicted that
these emotion manipulations would also affect participants'
affective reaction toward the objects, and that this could help
explain changes in valuation. Specifically, we expected that the
expelfeelings generated by the disgust manipulation would
increase negative affective reaction and/or decrease positive
affective reaction toward the object, while the change
circumstancefeelings generated by the sadness manipulation
would increase positive affective reaction toward the object
among choosers but possibly reduce it among sellers.
Method
The original Lerner et al. (2004) study used three emotion
manipulation conditions: neutral, disgust, and sadness. For our
analysis, we use the baseline endowment study reported earlier
as the neutral condition, as the participants were drawn from the
same population and the studies were run concurrently. Sixty-
seven participants were in the neutral condition, sixty in the
disgust condition, and fifty-nine in the sadness condition.
Participants were randomly assigned to the seller or chooser
role. Sellers were given a pen and were told that it was theirs to
keep unless they choose to sell it, while choosers were told that
they did not yet own a pen but they would have the option to
receive one. After completing the valuation task and remaining
questionnaire items, including psychological ownership and
affective reaction for the pen, final selling prices for the pens
were determined by random draw. All participants left the
experiment with either the pen or cash according to the
decisions they had made during the valuation process.
To reduce potential demand effects, participants were told
that two separate studies were being conducted. They received
all materials as they entered the room, which included the pen
446 S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
for individuals assigned to the seller role. The first study was
described as a project on recalling emotional events.
Participants first read a newspaper article chosen to be either
disgusting (a man who found a mouse baked into a hot dog bun,
complete with picture) or sad (a woman who died on her
wedding day during her first dance with her new husband). To
make the emotional experience more personally relevant,
participants answered several questions about how they would
feel if they had been one of the individuals in the news story. To
further make the emotion more intense and meaningful, they
were then asked to write about an experience of their own that
had made them either disgusted or sad, with as much detail as
possible. This type of self-reflective writing has been previously
found to elicit target emotions (Lerner & Keltner, 2001). Once
this task was completed, they were instructed to proceed to the
second study on valuation, labeled asset pricing research.
Note that no manipulation check of self-reported emotion was
collected between the two tasks, since doing so has been found
to reduce the impact of emotions on later judgment (Keltner,
Locke, & Audrain, 1993).
Results
Planned comparisons of participants' valuations for the pens
generally supported the findings of Lerner et al. (2004);Fig. 2
displays the mean price for each condition. Sadness increased
choice prices relative to the neutral condition ($2.71 vs $1.67,
t(62) = 3.19, p= .001, one-tailed), and reduced selling prices,
although not significantly ($2.05 vs $2.30, t(60) = .95, p= .17).
This pattern reversed the traditional endowment effect, showing
greater valuation among choosers than among sellers ($2.71 vs
$2.05, t(57) = 2.04, p= .02). An ANOVA revealed the expected
crossover interaction (F(1,122) = 13.32, p= .003). We did not
replicate the main effect of disgust on valuation for sellers or
choosers, but we did find a marginally significant effect of
disgust on selling prices ($1.90 vs $2.30, t(61) = 1.39, p= .08).
We also found that disgust removed the traditional endowment
effect, with no significant difference in valuation between
choosers and sellers ($1.67 vs $1.90, t(58) = .83, p= .20). In
addition, we found that sad participants set higher choice prices
than disgusted participants (t(58) = 3.24, pb.001), but that the
specific emotion did not affect selling prices (t(57) = . 54,
p= .30). ANOVA showed a significant interaction between
emotion (disgust, sadness) and ownership role (F(1,115) = 4.44,
p= .04) as well as a main effect of emotion (F(1,115) = 7.88,
p= .006).
We expected that the decreased selling prices in the disgust
condition would be due to increased negative affective reaction
and/or decreased positive affective reaction toward the object,
while the increased buying prices in the sadness manipulation
would be due to increased positive affective reaction toward the
object among choosers who were looking for a change in
circumstances. Unfortunately, relative to the neutral condition,
we did not find that disgust had a significant effect on either
positive affective reaction or negative affective reaction toward
the pen. Interestingly, a regression on valuation with both
emotion and positive affective reaction revealed that the
emotion condition became non-significant for valuation
(t= .97, p= .34) but that positive affective reaction was
significant (t= 2.81, p= .007), suggesting that affect toward
the pen was having an effect on valuation. Results for the
sadness condition were more encouraging. We verified that the
sad choosers had higher valuation for the pen than neutral
choosers (ß
emotion
= .52, t= 3.2, p= .002). We also found that
emotion (sad or neutral) had a significant effect on positive
affective reaction toward the pen (ß
emotion
= .31, t=2.58,
p= .012) as expected, with greater positive affective reaction
among the sad choosers. Emotion also had a significant effect
on psychological ownership (ß
emotion
= .46, t= 2.50, p= .015) but
not on negative affective reaction. Both psychological owner-
ship (ß
po
= .31, t= 2.9, p= .005) and posit ive affective reaction
aff
=.76, t= 5.14, pb.001) had a significant effect on
valuation, as we expected. Finally, a regression of chooser
valuation that included condition, psychological ownership, and
positive affective reaction found that the emotion condition
became non-significant in the presence of the other variables
emotion
= .23, t= 1.44, p= .16), suggesting mediation. Sobel
tests further confirm that psychological ownership (z= 1.84,
p= .07) and affective reaction (z= 2.30, p= .02) were significant
mediators of the effect of sadness on choosers' valuations. A
similar mediation analysis was done to see whether differences
in positive affective reaction could also explain the difference in
valuation between sad choosers and sad sellers (i.e., the reverse
endowment effect); positive affective reaction was found to also
be a significant mediator for those results.
Study 7: Possession loss aversion
Study 7 was designed to replicate Brenner et al.'s (2007)
Study 2. These authors showed that the positive or negative
valence of an endowed option affected willingness to switch to
a different option of similar valence. Specifically, individuals
endowed with a positively valenced option were more likely to
retain their choice, but individuals endowed with a negatively
valenced option were more likely to switch. We predicted that
the valence of the endowed option would change the affective
2.05
1.67 1.67
2.71
1.90
2.30
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Neutral Disgust Sadness
Seller
Chooser
Fig. 2. Valuation ($) results for Study 6.
447S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
reaction toward the object, which then would mediate the
willingness to stay with the endowed option.
Method
We use an unpublished version of Brenner et al.'s (2007)
Study 2 that included a positively valenced set of conditions in
addition to a negatively valenced set. Participants were 138
undergraduates from a Midwest university randomly assigned
to one of four conditions. One group of participants were told
they had won a radio station promotion and would receive one
of two attractive prizes, either $100 cash or a ski package. The
second group of participants were told that they had been caught
speeding and received one of two unattractive penalties, either a
$100 fine or a visit to traffic school. All participants were then
given the opportunity to switch to the other prize/penalty. After
making their choice, participants completed psychological
ownership and affective reaction measures for their initially
endowed option.
Results
Willingness to keep the endowed option replicated the
findings of Brenner et al. (2007). Among participants endowed
with the cash prize, 85.7% chose to keep it, while among those
endowed with the ski package, 31.4% chose to keep it. The sum
of these proportions (defined as STAYSUMin the original
study) is 117.1%, significantly higher than 100% (z = 3.62,
pb.001) and consistent with the endowment effect. Among
participants endowed with the fine penalty, 17.1% chose to keep
it; among those endowed with the traffic school penalty, 72.7%
chose to keep it. The sum of these proportions is 89.9%,
significantly less than 100% (z = 2.70, p= .007), which the
authors call a grass is greenereffect and is a reverse of the
typical endowment effect.
We predicted that the difference in willingness to keep the
endowed option would be the result of different levels of
affective reaction toward the options in the two valence
conditions. We test the effects with a series of logits, in which
the decision to keep the endowed option was regressed against
the other relevant variables. For this analysis, an endowment
effect would appear as a positive and significant constant in the
regression, indicating an overall preference to keep the endowed
option. Starting with the attractive prize options, a logit on the
choice to keep the endowed option found a significant
endowment effect (α= .78, z = 2.14, p= .03) as well as a
significant effect for item (ß
item
= 2.57, z = 4.25, pb.001),
reflecting an overall preference for the cash prize. Additional
logits of the choice to keep the option showed a significant
effect for psychological ownership (ß
po
= .45, z = 2.77, p= .006)
and for positive affective reaction toward the endowed object
aff
= .95, z = 2.80, p= .005). A logit with all variables included
continued to show significant effects for psychological
ownership and positive affective reaction (both p's b.05), but
the endowment effect itself became non-significant (α= 2.16,
z = 1.28, p= .20).
Considering next the unattractive penalty options, a logit on
the choice to keep the endowed option found a significant
negative endowment effect (α=1.58, z = 3.51, pb.001) as
well as a significant effect for item (ß
item
= 2.55, z = 4.30,
pb.001), reflecting an overall preference for the traffic school
penalty. Additional logits of the choice to keep the option
showed no significant effect for psychological ownership or for
positive affective reaction, but did show a significant effect for
negative affective reaction toward the endowed object (ß
neg
=
.32, z = 2.19, p= .03). A logit with all variables included
revealed a significant effect for negative affective reaction
(pb.05), but the endowment effect itself became less significant
(α=2.82, z = 1.7, p= .09), sugges ting partial mediation.
Study 8: Unpleasant touch
The studies so far that have focused on how affective
reaction changes valuation have primarily found effects through
changes in positive affective reactions rather than negative ones,
with the exception of the negative valence manipulation in the
possession loss aversion study. We wished to show that
negative affective reaction can play a more direct role in an
individual's emotional attachment toward an object, so we
developed an additional new study with a more explicitly
unpleasant object. Recent research on the relationship between
object touch and the endowment effect has suggested that
psychological ownership is greater when individuals can touch
an object, leading to higher valuation (Reb & Connolly, 2007;
Wolf, Arkes and Muhanna, 2008); it has also been found that
touch for unpleasant objects can simultaneously increase
psychological ownership and decrease affective reaction (Peck
& Shu, 2009; Peck & Wiggins, 2006). We test these relation-
ships more fully in this study.
Method
Participants were 60 undergraduate students in a Midwest
business school's introductory marketing classes who complet-
ed the exercise in groups of up to thirty at one time in exchange
for course extra credit. The methodology is identical to the
baseline endowment study presented earlier, with one important
difference. The same model of rubber-grip pen used in the
previous study was changed from a pleasant-to-touch object to
an unpleasant-to-touch object by applying spray-on adhesive
and rolling it in fine black sand. Functionality and basic
appearance of the pen remained unchanged. As before,
participants were randomly assigned to a seller or chooser
role, provided their valuation for the pen, and completed the
remaining questionnaire items. After the final price was
established by random draw, all participants left the experiment
with either the pen or cash according to the decisions they had
made during the valuation process.
Results
Contrary to the typical endowment effect finding, choosers and
sellers valued the pen similarly, with both groups valuing it very
448 S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
low ($.79 vs $.59, F(1, 5 9)= 1 .92, p= .17). As expected, however,
sellers continued to show a greater level of psychological
ownership than choosers (3.1 vs 1.7, F(1, 59) = 13.67 , pb.001).
Also as expected, there was a significant difference in negative
affective reaction between the roles, with sellers having a stronger
negative affective reaction toward the pen than choosers (2.4 vs
2.0, F(1, 59)= 6.18, p= .02). No significant difference between
the roles was found for positive affective reaction.
Since we predicted that psychological ownership and
affective reaction were mediators for valuation, we expected
that the opposing changes in these measures by role could
explain the lack of an endowment effect for this particular
object. In other words, we expected that greater psychological
ownership for sellers was having a positive effect on valuation,
but that this was counteracted by their greater negative affective
reaction, which would have a negative effect on valuation. We
tested this with a series of regressions. As stated, seller/chooser
role did not have a significant effect on valuation (ß
role
=.19,
t=1.38, p= .17) but it did have a significant effect on both
psychological ownership (ß
role
= 1.44, t= 3.70, pb.001) and
negative affective reaction (ß
role
= .41, t= 2.49, p= .02). In
addition, psychological ownership had a significant effect on
valuation (ß
po
= .20, t= 2.01, p= .05) and negative affective
reaction had a marginally significant negative effect on
valuation (ß
neg
=.19, t=1.85, p= .07). Finally, a regression
of valuation with all three variables showed that psychological
ownership (ß
po
= .10, t= 2.22, p= .03) and negative affective
reaction (ß
neg
=.17, t=1.68, p = .09) were both affecting
valuation, but in opposite directions.
Study 9: Hedonic vs utilitarian
Our final study is based on Experiment 2 of Dhar and
Wertenbroch (2000), which demonstrated that loss aversion was
stronger for hedonic items. Their experiment manipulated both
ownership (by placing participants into either a forfeiture or
acquisition condition) and elaboration (by asking participants to
generate reasons for their choice). They found that a hedonic
option was more popular under forfeiture, but that this effect was
dampened when participants were asked to elaborate on the
choice. We predicted that both affective reaction and psycholog-
ical ownership would be affected in this study; specifically, we
expected that the forfeiture condition would increase affective
reaction for the more hedonic item, and that the forfeiture and
reason conditions would increase psychological ownership.
Method
We use the same products as the original study, a glue stick
and a small package of M&Ms. One-hundred and twenty-nine
undergraduates were randomly assigned to one of four
conditions in the 2 (forfeit or acquire) × 2 (reasons or no
reasons) between subjects study. In the acquisition conditions,
participants were shown both objects and told they would be
allowed to select one at the end of the study. In the forfeiture
condition, participants were given both objects but told that they
would have to give one up at the end of the study. In the reason
conditions, participants were asked to write down the reasons
why they would like to own M&Ms and glue sticks before
making their final choice.
Results
We found a strong preference for the hedonic good, the
M&Ms, across all conditions. In the no reason conditions,
80.6% of participants in the forfeiture condition and 84.4% of
participants in the acquisition condition chose the M&Ms, while
in the reason conditions, 87.9% of participants in the forfeiture
condition and 84.8% of participants in the acquisition condition
chose the M&Ms. Thus, we did not find significant effects on
choice for either task or reasons.
While we are unable to replicate the main effects of the
original study due to an overwhelming desire for chocolate
among our undergraduates, we did find interesting effects for the
psychological ownership and affective reaction measures. For
psychological ownership of the M&Ms, we found a significant
main effect for task, with those in the forfeiture condition
expressing greater psychological ownership than those in the
acquisition condition (4.17 vs 2.86, F(1, 125) = 16.94, pb.001),
consistent with the ownership role effects reported in Studies 1
and 8. We also found a significant main effect of reasons on
psychological ownership, consistent with our prediction that
elaborating about the options would increase psychological
ownership (3.89 vs 3.11, F(1, 125) = 6.15, p= .01). We also
found a marginally significant interaction effect for task and
reason on psychological ownership (F(1, 125) = 3.64, p= .06), a
result consistent with the effects found for choices in the original
study.
We had also predicted that the hedonic aspects of the item
would be most relevant in the forfeiture condition and thus
increase positive affective reaction for the hedonic item; we found
this effect, with forfeiture participants reporting a marginally
significant higher positive affective reaction than acquisition
participants (3.26 vs 3.0, F(1, 124)= 3.0, p=.09). There was no
significant effect on affective reaction from the reason conditions.
Finally, we ran a logit model to test the relationship of preference
for M&Ms against dummy variables for task, reason, and their
interaction, along with psychological ownership and positive
affective reaction for both the M&Ms and the glue stick. Task,
reason, and the interaction term were all non-significant, but
M&M psychological ownership (ß
pom
=.93, z=2.30, p=.02)and
M&M positive affective reaction (ß
affm
=1.3, z=2.12, p=.03)
both had significant positive effects on choice, while glue stick
psychological ownership (ß
pog
=1.76, z=3.18, p=.001) and
glue stick positive affective reaction (ß
affg
=2.6, z= 3.20,
p=.001) both had significant negative effects on choice. Even
among participants with a strong preference for M&Ms,
psychological ownership and affective reaction continued to
operate as significant predictors of choice for endowed objects.
General discussion
Across nine different studies, we have tested the two
psychological measures of psychological ownership and
449S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
affective reaction and shown their relationship to either object
valuation or choice under a variety of manipulations. A
summary of both the predicted mediators and the significant
main findings for all nine studies is provided in Table 2. Study 1
replicated the basic endowment effect and provided evidence
that both psychological ownership and affective reaction work
together to mediate valuation. Studies 2 through 5 demonstrated
that manipulations of longer ownership, attention, or experience
in trading cause changes in psychological ownership, which
affected both valuation and choice. Studies 6 through 9 focused
on changes in positive and negative affective reactions toward
the object, and showed that these affective reactions also play an
important role in valuation and choice. While this paper is not
the first to suggest that emotions and attachment are an
important aspect of loss aversion, we believe we are the first to
directly measure both constructs and show their ability to
explain many of the findings in the literature.
One of the interesting effects to emerge from these studies is
the countervailing effects of psychological ownership and
negative affective reaction documented for the unpleasant to
touch object in Study 8. While we do not do a direct comparison
in the analysis of results, the results of this study can be
compared to the results of Study 1, since the same object is used
in both studies with only the valence of the touch experience
being changed. In both Study 1 and Study 8, the effect of
ownership role on the psychological ownership measure is the
same; for both studies, participants in the seller role reported
greater psychological ownership than those in the chooser role,
even when the touch experience was unpleasant. Instead, it is
the affective reaction toward the object that is most affected by
the valence of touch. In Study 1, sellers report a more positive
affective reaction than choosers, while in Study 8, sellers report
a more negative affective reaction than choosers. These results
add support to the idea that individuals are highly sensitive to
Table 2
Summary of predictions for mediators psychological ownership (P.O.) and affective reaction (A.R.) and actual results per study.
Study number Original research findings Predicted mediators Results of replications with process variables
P.O. A.R.
Study 1 Kahneman et al. (1990): endowed
sellers (choosers) value an object
more than buyers
++Legal ownership (seller role) increases valuation,
psychological ownership, and positive affective reaction.
Psychological ownership and positive affective reaction
jointly mediate role's effect on valuation.
Study 2 Strahilevitz and Loewenstein (1998):
valuation among sellers increases with
duration of ownership
+Longer duration of ownership increases valuation
and psychological ownership among sellers.
Psychological ownership mediates duration's effect
on valuation.
Study 3 Johnson et al. (2007): chooser
valuation depends on order of queries
+Starting with value-increasing queries increases valuation
and psychological ownership among choosers.
Psychological ownership mediates query order effect on
valuation.
Study 4 Carmon and Ariely (2000): attention
to aspects foregone in a trade affects
buying and selling prices
+
$
+
tix
Attention to expenditure increases selling prices and
psychological ownership for money.
Attention to benefit increases buying prices, psychological
ownership for tickets, and positive affective reaction.
Psychological ownership for tickets and positive affective
reaction mediate attention's effect on buying prices.
Study 5 List (2003): weaker endowment
effects for experienced traders of
collectable goods
Market experience increases willingness to trade and
decreases psychological ownership.
Psychological ownership mediates experience's effect on trade.
Study 6 Lerner et al. (2004): sadness and
disgust affect buying and selling prices
disg
+
sad
Sadness increases valuation, psychological ownership, and
positive affective reaction for choosers.
Psychological ownership and positive affective reaction
mediate the effects of sadness on chooser valuation.
Study 7 Brenner et al. (2007): positive or
negative valence of endowed option
affects willingness to switch
neg
+
pos
Participants show lower willingness to trade for positive
options and higher willingness to trade for negative options.
For positive options, psychological ownership and positive
affective reaction mediate willingness to trade.
For negative options, negative affective reaction partially
mediates willingness to trade.
Study 8 New study: investigation of endowment
effect for unpleasant-to-touch objects
+Ownership role of seller for an unpleasant to touch item
increases psychological ownership and negative affective
reaction, but does not affect valuation.
Psychological ownership and negative affective reaction
significantly affect valuation for sellers.
Study 9 Dhar and Wertenbroch (2000): loss
aversion stronger for hedonic than for
utilitarian items
++Forfeiture and providing reasons both increase psychological
ownership; forfeiture also increases positive affective reaction.
Psychological ownership and positive affective reaction
significantly affect choice of a hedonic vs utilitarian option.
450 S.B. Shu, J. Peck / Journal of Consumer Psychology 21 (2011) 439452
the emotional aspect of losses, whether positive or negative
(Brenner et al., 2007). They also clearly demonstrate how
psychological ownership and affective reaction can have
independent, countervailing effects on valuation.
We hope that the introduction of these two measures of
psychological ownership and affective reaction will provide
future endowment effect researchers with additional tools to
understand the process by which their manipulations influence
valuation and choice. We do not suppose that these two
measures are enough to fully explain all effects; even within the
studies presented here, some effects remain significant after
mediation, such as the attention to expenditure effects in Study
4. These constructs are designed to work in support of the
theories being tested by endowment effect researchers rather
than to serve as replacements. Using them in conjunction with
other measures, such as the post decision discomfort felt by
participants in the Carmon et al. (2003) studies, can provide
new insights on how emotional attachment for endowed objects
relates to affect and thoughts about unchosen options. Other
possible applications of these measures include examining how
intentions to sell, such as in Simonson and Drolet (2004),
influence psychological ownership (as in Study 5), or how a
communal relationship norm, as in Aggarwal and Zhang
(2006), influences affective reactions. We feel that these
findings offer a significant first step in providing a deeper
understanding of the processes that underlie the endowment
effect, setting the stage for future research.
In addition to serving as useful constructs for future
endowment effect research, an understanding of these two
aspects of loss aversion may help provide marketing practi-
tioners with better insights on how endowment effects can be
triggered in retail environments where actual legal ownership
has not yet occurred. An increase in psychological ownership
without legal ownership was found in Study 3 by having
choosers list their reasons for wanting the pen, and in Study 4 by
having buyers attend to the benefits of having the tickets. Other
research has found that psychological ownership can be
increased through touch (Peck & Shu, 2009; Reb & Connolly,
2007), product imagery (Peck & Shu, 2009), or an active role in
the design of a product (Fuchs et al., 2010). Work on
anticipatory possession and prefactual ownership (Ariely &
Simonson, 2003; Carmon et al., 2003) also provides insight on
how buyers may perceive themselves as owners prior to taking
full possession. Retailers who employ techniques of encourag-
ing customers to imagine having the item in their homes,
allowing trial periods or test drives, encouraging product
customization, or simply offering higher levels of pre-purchase
interaction with the product may be able to increase
psychological ownership to a level that triggers loss aversion
and an endowment effect. This would also suggest that
consumers should be wary of retailers that use these techniques,
as a consumer may unintentionally pay more for a product.
Similarly, marketing professionals can also find ways to
increase the affective reaction toward their products such that
the emotional bond is strengthened and loss aversion becomes
more painful, thus increasing valuation. Our findings demon-
strated increased positive affective reactions for products when
buyers pay attention to potential benefits (Study 4), feel sadness
(Study 6), encounter positive or hedonic options (Studies 7 and
9), or consider forfeiture (Study 9). Products that feel good
when touched also increase the positive affective reaction and
the valuation of a product (Peck & Shu, 2009). Retailers can
encourage interaction in stores with products that are pleasant to
touch such as having samples sheets or towels available for
consumers to feel. This strategy increases valuation through an
increase in affective reaction due to pleasant sensory feedback
and also through psychological ownership because of the pre-
purchase interaction. By illuminating the processes underlying
the endowment effect with the constructs of affective reaction
and psychological ownership, we hope to have provided an
organizing structure for the existing literature as well as ideas
for practitioners to better increase the attachment and affect
consumers feel toward their products.
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