The effect of anonymity on the WTA WTP gap in endowment effect games
The Effect of Anonymity on the WTA WTP Gap in Endowment Effect Games. (May 2012) Gregory Cohen Department of Economics Texas A&M University Research Advisor: Dr. Alex Brown Department of Economics I conducted experiments to determine whether anonymity affects the gap between the willingness to accept (WTA) and willingness to pay (WTP) in endowment effect games. Earlier research theorizes complete anonymity is necessary to eliminate the contamination of "signaling" within the endowment effect game. The "signaling" results when buyers over value their items and sellers under value the items they are trading for to signal they are good bargainers, which leads to suboptimal decisions. I find that the difference between an anonymous treatment and a non anonymous treatment yield WTA WTP gaps that are not statistically significant. I utilize a dictator game to ensure my anonymity procedure is sufficient.