Enhancing valuation: the impact of self-congruence with a brand on the endowment effect

Abstract

The endowment effect states that individuals are more likely to overvalue objects that they own, an effect that has been demonstrated repeatedly across numerous experiments under a variety of boundary conditions. Research, however, has yet to examine how an individual's perceptions of congruence with an object may impact the endowment effect. This research fills this gap by examining how branding impacts the endowment effect. Using self-congruence theory, this paper demonstrates that self-congruence with a brand will impact both the price a seller is willing to accept for an object and the price a buyer is willing to pay for an object. Moreover, self-congruence with the brand impacts valuation only when it is positive with no effect shown under conditions of brand incongruence. Furthermore, this research demonstrates that the endowment effect can be qualified under specific conditions of asymmetry in self-congruence with the brand between the seller and the buyer. Specifically, buyers with high perceptions of self-congruence with the brand will be willing to pay a price that is not statistically different to that of the price demanded by sellers who are incongruent with the brand. Conversely, the disparity between valuations, as compared to a control, is increased when the seller is congruent, but the buyer is incongruent with the brand.