Trading wine: On the endowment effect, loss aversion, and the comparability of consumer goods

In the present article we argue that the extent to which potential traders are susceptible to the endowment effect, is related to the comparability of the to be traded goods. This hypothesis was tested in an experimental market in which participants endowed with a bottle of wine were offered the opportunity to trade their wine for another wine. Results of our study support the hypothesis, and corroborate the generalization that the endowment effect is a manifestation of loss aversion.