The Endowment Effect in China Rural Land and Property Market

Abstract

To evaluate how the endowment effect be the obstacle in the agricultural and property market and to find key factors which have impact on endowment effect, this article re-defined what the endowment effect is in rural-land property market, which is mainly focus on how the decision-maker establish choices and evaluates the worth of the deals they hold. Then, this paper studies the phenomenon of price preference among supply and demand-side of farmland and property market in the application of Shaanxi province. Third, this paper exams the Chengdu's villagers voluntarily and compensation of the withdrawal from rural homesteads (WRH) with the obvious conflict between supplying and demanding of urban and agricultural building land resources. Based on the re-definition and main applications, this paper indicates that the key factors which affect the endowment effect includes emotional ties, degree of substitution of goods as well as products, income levels, price preferences on the demand sides as well as supply sides of the land market, perceived risk evaluation of future income situation, forecasted risk of the stability of the rural land property rights, the labour situation among various types of farmers, age, membership in cooperatives and whether there is a local intermarriage or not. This paper will also critically examine how endowment effect influence supply and demand relationships in the land and property markets, how the government might issue directives or create policies to support or discourage endowment effect in the farmland market and how to establish the innovation of "three rights of separation" in the land market. The potential remedies and suggestions are provided.