By extending a typical endowment effect experiment with the possibility to win the endow-ment in a real effort contest, we found two enforcing effects that led to a complete market failure. Subjects who won the item in the competition had an extremely high willingness to accept (trophy effect)....

By extending a typical endowment effect experiment with the possibility to win the endow-ment in a real effort contest, we found two enforcing effects that led to a complete market failure. Subjects who won the item in the competition had an extremely high willingness to accept (trophy effect)....

Successful work - either invested to create or to obtain a product - increases the customer's valuation of the product. These phenomena are called the IKEA and the trophy effect. We test both of them separately as well as combined and find that the trophy winner effect looms larger than the IKEA...