Selling the Forest, Buying the Trees: Mental Representation of Endowments

We present a Construal Level Theory approach to the endowment effect by demonstrating that selling and buying prices are differentially influenced by the value of products’ low and high-level construal features. We first show that sellers construe products at a higher level than do buyers (Study 1). Based on this, we predict and demonstrate that selling prices are higher than buying prices when (1) the product is superior on the desirability dimension and inferior in the feasibility dimension, but not vice versa (Study 2), (2) the event is framed in such a way that its central aspects are interesting and secondary aspects boring, but not vice versa (Study 3A), (3) the primary (goal-relevant) aspects of the object are superior and the secondary (goal-irrelevant) aspects of the object inferior, but not vice versa (Study 3B), (4) individuals focus on a product’s desirability-related aspects rather than the same product’s feasibility-related aspects (Study 4A), and (5) individuals are in a why mindset, but not when they are in a how mindset (Study 4B). Finally, we demonstrate that owner prices follow the same pattern as buying prices, providing further support to our construal level theory account of the endowment effect (Study 5).