Reference and preference: how does the brain scale subjective value?

Abstract

Would you be willing to pay more for a new television the same day you bought a new house? Would you be more likely to purchase that television if it was marked on sale? Most individuals respond affirmatively to questions of this form, likely because they use a reference point to help with evaluating their options. A common example is when ownership of an item affects its valuation. This is known as the endowment effect, demonstrated by individuals reporting a higher minimum willingnessto- accept (WTA) as a purchase price for an already-owned item than a maximum willingness-to-pay (WTP) to acquire the same item.