Revisiting Endowment Effect in the light of E-WOM
Description
Various different aspects of the endowment effect have already been explored. This research focuses on a hitherto unexplored area: the effect of electronic word-of-mouth (e-WOM) on endowment effect. Three experiments are conducted in order to test the effect of positive and negative e-WOM comments on endowment effect by using Amazon.co.uk reviews. The results reveal that positive and negative e-WOM content do not only increase or decrease average buying and selling prices, but also the ratio between them. The experiments showed that where positive comments increase the loss aversion coefficient significantly, the negative comments lead to the disappearance of endowment effect. Obtained results have theoretical and practical implications. Apart of revealing another new condition, under which the endowment effect disappears, the findings regarding e-WOM content have several managerial implications.