<p>The discrepancy between WTP and WTA is known as the <a href="https://en.wikipedia.org/wiki/Endowment_effect" rel="noreferrer"><strong>endowment effect</strong></a>, and this has been extensively studied in behavioral economics.</p>

CC BY-SA 4.0
2020-09-24T02:03:41.893Z
@KennyLJ: The endowment effect is an *effect*, an empirical regularity, not an explanation of something else. Rather the endowment effect itself is to be explained because of its anomalous nature. The terminology is standard in behavioral and experimental economics literature.
Herr K.
CC BY-SA 4.0
2020-09-24T05:47:15.820Z
@KennyLJ: Perhaps we ought to refer back to the author who first coined and then popularized the term endowment effect: [Thaler et al. (1991)](https://www.aeaweb.org/articles?id=10.1257/jep.5.1.193) use the term to refer to "*the fact that people often demand much more to give up an object than they would be willing to pay to acquire it*". This description as well as the wine example given in that paper closely resembles OP's laptop example. The *JEP* paper also explicitly says that endowment effect "*can be explained by a notion of loss aversion*" (p.199).
Herr K.
CC BY-SA 4.0
2020-09-24T06:16:40.157Z
[Dhami (2016)](https://global.oup.com/ukhe/product/the-foundations-of-behavioral-economic-analysis-9780198715535?cc=us&lang=en&), a textbook that is arguably the counterpart of MWG for the field of behavioral economics, has a subsection (3.2) devoted to outlining how loss aversion *causes* the endowment effect, rather than the other way around. The same direction of explanation can also be found in [Ericson & Duster (2014, *NBER WP*)](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.914.7293&rep=rep1&type=pdf).
Herr K.
CC BY-SA 4.0
2020-09-24T07:53:01.603Z
>> *You have fixated on the terms "loss aversion" and "endowment effect".* << Personally I find this rude. >> *I have not mentioned "loss aversion" once.* << So? No one is claiming you did. >> *The WTP-WTA gap was already discussed long before the term "endowment effect" was ever coined. It corresponds to the older "controversy" about the CV-EV gap.* << Citation needed. How about you greatly expand on [your own answer](https://economics.stackexchange.com/a/39872/1601) with these claims (and references) thereby making it a great one?
Giskard
CC BY-SA 4.0
2020-09-23T18:11:31.790Z
2020-09-23T18:11:31.790Z
Herr K.
<p>Given the situation below, can someone help me identify/name the logical phenomenon?</p>
<p>So I own a laptop that I don’t use…. Someone has offered me £1000 dollars  for it but I decided not to sell it. I myself would NOT pay £1000 dollars for it… I feel like there’s some kind of illogical behaviour going on here because me not selling it for £1000 is financially equivalent to me buying it for $1000. I think in both cases I’m giving up £1000 for a laptop. Do you guys know  if there a word/name for this?</p>

<economic-terms>
Willingness to accept is different from willingness to pay - is there a name for this
Anthony Phan
# Willingness to accept is different from willingness to pay - is there a name for this

(Asked by: username_0 on 2020-09-23)

Given the situation below, can someone help me identify/name the logical phenomenon?

So I own a laptop that I don’t use…. Someone has offered me £1000 dollars for it but I decided not to sell it. I myself would NOT pay £1000 dollars for it… I feel like there’s some kind of illogical behaviour going on here because me not selling it for £1000 is financially equivalent to me buying it for $1000. I think in both cases I’m giving up £1000 for a laptop. Do you guys know if there a word/name for this?

**Tags:** economic-terms

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## 1 answers

### Answer by username_1 on 2020-09-23. Score: 6

The discrepancy between WTP and WTA is known as the [**endowment effect**](https://en.wikipedia.org/wiki/Endowment_effect), and this has been extensively studied in behavioral economics.

> **Comments:**
> **username_1**: @KennyLJ: The endowment effect is an *effect*, an empirical regularity, not an explanation of something else. Rather the endowment effect itself is to be explained because of its anomalous nature. The terminology is standard in behavioral and experimental economics literature.  
> **username_1**: @KennyLJ: Perhaps we ought to refer back to the author who first coined and then popularized the term endowment effect: [Thaler et al. (1991)](https://www.aeaweb.org/articles?id=10.1257/jep.5.1.193) use the term to refer to "*the fact that people often demand much more to give up an object than they would be willing to pay to acquire it*". This description as well as the wine example given in that paper closely resembles OP's laptop example. The *JEP* paper also explicitly says that endowment effect "*can be explained by a notion of loss aversion*" (p.199).  
> **username_1**: [Dhami (2016)](https://global.oup.com/ukhe/product/the-foundations-of-behavioral-economic-analysis-9780198715535?cc=us&lang=en&), a textbook that is arguably the counterpart of MWG for the field of behavioral economics, has a subsection (3.2) devoted to outlining how loss aversion *causes* the endowment effect, rather than the other way around. The same direction of explanation can also be found in [Ericson & Duster (2014, *NBER WP*)](http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.914.7293&rep=rep1&type=pdf).  
> **username_2**: >> *You have fixated on the terms "loss aversion" and "endowment effect".* << Personally I find this rude. >> *I have not mentioned "loss aversion" once.* << So? No one is claiming you did. >> *The WTP-WTA gap was already discussed long before the term "endowment effect" was ever coined. It corresponds to the older "controversy" about the CV-EV gap.* << Citation needed. How about you greatly expand on [your own answer](https://economics.stackexchange.com/a/39872/1601) with these claims (and references) thereby making it a great one?  

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