ENDOWMENT EFFECT, "STATUS QUO" BIAS AND CONTINGENT VALUATION

Contingent valuation of public goods (or bads) is strongly biased due to the endowment effect and/or the status quo bias. On one hand the estimates of willingness to pay are kept low by the endowment effect for the money the subject is asked to pay. On the other hand estimates of willingness to accept are kept high by the endowment effect towards the asset the subject presently owns or has access to. It follows that the endowment effect is at least partly responsible for the well-known asymmetry between willingness to pay and willingness to accept. To try to assess the role of the endowment effect (or of the status quo bias) in the valuation of public goods, we collect contingent valuations where the willingness to pay is asked for not losing an asset and the willingness to accept is asked as a substitute of a new asset. In such a way a loss is compared to a loss and a gain to a gain. We compare the results with two control groups ("traditional" willingness to pay and willingness to accept settings), where, as expected, we find a larger difference.