Abstract

We study the impact of endowments and expectations on reference point formation and measure the value of food safety certification in the context of fish trading on real markets in Nigeria. In our field experiment, consumers can trade a known food item for a novel food item that is superior in terms of food safety--or vice versa. Endowments matter for reference point formation, but we also document a reverse endowment effect for a subsample of respondents. The effect of expectations about future ownership is weak and mixed. While expectations seem to affect bidding behavior for subjects "trading up" to obtain the certified food product (a marginally significant effect), it does not affect bids for subjects "trading down" to give up this novel food item. Finally, willingness to pay for safety certified food is large for our respondents-our estimate of the premium is bounded between 37 and 53% of the price of conventional, uncertified food.

Keywords

Reference-dependent utility; Reverse endowment effect; Economic valuation; Food safety; Asymmetric valuation; Loss aversion; C57; C93; D12; D44; D84

Published in

Experimental Economics
2023, Volume: 26, number: 5, pages: 1060-1084
Publisher: SPRINGER

SLU Authors

• Lagerkvist, Carl-Johan

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Economics


Publication identifier

DOI: https://doi.org/10.1007/s10683-023-09809-7

Permanent link to this page (URI)

https://res.slu.se/id/publ/126368