Abstract
Endowment effects have been mainly investigated for choice under certainty. In this paper we present two experimentes which directly test the effect of endowment and framing for choices under risk. In both experiments subjects were endowed with cash and some quantity of state contingent claims. They were offered the chance to buy additional claims which could cover their risky position or which would take them to another risky position. Standard utility theory gives strong predictions about the amount subjects should bid for the additional claims. In addition, the bid should not depend on the way the initial endowment is framed. Our results show that subjects did not follow the prediction of standard utility theory. Their responses were influenced by both framing and initial endowment - although the relation strength of these effects appeared to vary significantly, depending on the incentive scheme used.
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