Quantitative Analysis of Endowment Effect on Cars

Abstract

As the sharing economy develops, there is a possibility that the way in which people use cars will change dramatically from car ownership to sharing and there has been a rise in ride/car-sharing businesses. Therefore it became more important to understand the utility of car ownership, which is other than the means of transportation, that is, endowment effect of cars. In this research, the web questionnaire which asked the car sharing and car ownership intention for 1000 car owners and for 1000 non-car owners in Japan has been conducted. The result suggested that the endowment effect of cars for car owners was 480,000 yen per year on average. On the other hand, the utility of car ownership for non-car owners was 130,000 yen per year on average, which is considered as a means of pure transportation. The results obtained in this study could be explained by the prospect theory indicating steeper for losses than gains in the value function.