The endowment-institutional affinity effect.

Abstract

The endowment effect occurs when ownership of a good leads consumers to value the good more than its market value. Students who were given College of Business Administration insignia mugs to keep valued them significantly more than students who were given the same mugs to examine and return (nonendowment condition). The endowment effect also occurred for plain white mugs. Students who were given plain white mugs to keep valued them more than students who were given the same mugs to examine and return. Ownership of insignia mugs not only resulted in the endowment effect but also resulted in an institutional affinity effect: Students provided higher satisfaction ratings with the College of Business Administration than did students endowed with plain white mugs and students in nonendowed conditions. This study demonstrates the impact of the endowment effect on institutional affinity for insignia goods. However, the tandem endowment-affinity effect occurs at the attitude formation stage, not when an attitude has already been formed.