The mug
Would an LLM sell a mug it owns at the same price it would pay to buy it?
What this measures
The subject is told a mug is its own, and asked what it would sell it for. A second subject is shown the same mug, in the same words, told it is not theirs, and asked what it would pay for it. Nothing else differs. A price that reflects the mug should not care which of those two sentences preceded it.
People’s prices care a great deal. Owning something for a few minutes is enough to roughly double what it takes to give it up, and the effect survives being told the shop price — Kahneman, Knetsch and Thaler ran the experiment again with the price tags left on and the gap got wider, not narrower.
Human result benchmark
Median asking price $7.12, median offer $2.87 — owners wanted 2.48 times what buyers would pay for the same mug.
The mug as presented
a ceramic coffee mug. It is a plain white mug, 10cm high and 8cm in diameter, with a curved handle. You can drink from it or keep it as decoration.
| Ownership | What is asked |
|---|---|
| It is yours. owns it | How much would you sell it for? |
| It is not yours. | How much would you pay to buy it? |
Experimental setup
Each LLM is asked to put a price on the mug, and answers with a number and a sentence. One run is a block of ten trials, each in its own context, so the measurement is an average rather than a single draw.
Which arm a trial runs alternates from trial to trial, so each is asked exactly five times per block and the two averages rest on equal ground. Both arms are below, exactly as they are sent: the object paragraph is one piece of text rendered into each, and the arms differ by the word not and by sell against buy.
The elicitation is a stated price, not the incentive-compatible price list the original study used, and an LLM has no budget to discipline what it offers. The figures above are averages; the human ones quoted are medians, which is what the original study reported. Where an LLM declines to name a price at all, that is recorded and left out of the averages rather than counted as nothing.
The prompts
asked as the owner
To begin this interaction, here is a ceramic coffee mug. It is a plain white mug, 10cm high and 8cm in diameter, with a curved handle. You can drink from it or keep it as decoration. It is yours. How much would you sell it for? Please respond with just the price in euros and a small comment on your reasoning.
asked as the buyer
To begin this interaction, here is a ceramic coffee mug. It is a plain white mug, 10cm high and 8cm in diameter, with a curved handle. You can drink from it or keep it as decoration. It is not yours. How much would you pay to buy it? Please respond with just the price in euros and a small comment on your reasoning.
How much more did the LLMs ask than they offered?
- the gap
- How many times more the LLM wanted for the mug than it would pay for it. At 1.00× the two prices agree and there is no bar to draw; under it the LLM wanted less than it would pay, and the bar runs the other way.
- sell price
- What the LLM wanted for the mug, on average, when it was told the mug was its own.
- buy price
- What the LLM would pay for the same mug, on average, when it was told the mug was not its own.
Run it yourself
No run yet.
The run
Bibliography
- (2002). A Review of WTA/WTP Studies. Journal of Environmental Economics and Management 44(3), 426–447. Across 45 studies, the less a good resembles an ordinary market good, the wider the gap between what people will accept for it and what they will pay.
- (1990). Experimental Tests of the Endowment Effect and the Coase Theorem. Journal of Political Economy 98(6), 1325–1348. Experiment 6, with 77 students: median seller $7.12 against median buyer $2.87. Experiment 7 repeated it with the price tags left on the mugs and the gap grew.
- (1980). Toward a Positive Theory of Consumer Choice. Journal of Economic Behavior & Organization 1(1), 39–60. The paper that named the endowment effect and tied it to loss aversion.
Other experiments
- Decisions under uncertainty · Certainty effect — gains
- Decisions under uncertainty · Certainty effect — losses
- Decisions under uncertainty · Unlikely gains
- Decisions under uncertainty · Unlikely losses
- Conjunction fallacy · Linda problem
- Conjunction fallacy · Elena problem
- Endowment effect · The candle
- Commitment bias · The credits
- Commitment bias · The seeds
- Integrative bargaining · The orange
- Integrative bargaining · Battery pack