can be explained without reference to an endowment effect. Shogren, et al. (1994) noted that the experimental technique used by Kahneman, Knetsch and Thaler (1990) to demonstrate the endowment effect created a situation of artificial scarcity. They performed a more robust experiment with the same goods used by Kahneman, Knetsch and Thaler (chocolate bars and mugs) and found little evidence of the endowment effect in substitutable goods, acknowledging the endowment effect as valid for goods without substitutes—non-renewable Earth resources being an example of these. Others have argued that the use of hypothetical questions and experiments involving small amounts of money tells us little about actual behavior (e.g. Hoffman and Spitzer, 1993, p. 69, n. 23) with some research supporting these points (e.g., Kahneman, Knetsch and Thaler, 1990, Harless, 1989) and others not (e.g. Knez, Smith and Williams, 1985). More recently, Plott and Zeiler have challenged the endowment effect theory by arguing that observed disparities between WTA and WTP measures are not reflective of human preferences, but rather such disparities stem from faulty experimental designs. Implications Herbert Hovenkamp (1991) has argued that the presence of an endowment effect has significant implications for law and economics, particularly in regard to welfare economics. He argues that the presence of an endowment effect indicates that a person has no indifference curve (see however Hanemann, 1991) rendering the neoclassical tools of welfare analysis useless, concluding that courts should instead use WTA as a measure of value. Fischel (1995) however, raises the counterpoint that using WTA as a measure of value would deter the development of a nation's infrastructure and economic growth. The endowment effect changes the shape of the indifference curves substantially Similarly, another study that is focused on the Strategic Reallocations for Endowment analyses how it is the case that economics's agents welfare could potentially increase if they change their endowment holding. The endowment effect has also been raised as a possible explanation for the lack of demand for reverse mortgage opportunities in the United States (contracts in which a home owner sells back his property to the bank in exchange for an annuity) (Huck, Kirchsteiger & Oechssler, 2005). See also Escalation of commitment Mere ownership effect Loss aversion Omission bias Behavioral economics List of cognitive biases Sunk costs Transaction cost IKEA effect References External links Wright, Josh (2005). The Endowment Effect's Disappearing Act, and (2009) What's Wrong With the Endowment Effect? The "Mystery"