Repairing the Defective : The Endowment Effect in the Circular Economy

Repairers may play a substantial role in the shift from a linear (make, use, dispose) to a more circular economy, which minimises waste. Defective second-hand products are not only reused by its owners, but they are also traded in the second-hand market. Most behavioural research in the second-hand market has focussed on identifying underlying motivations of second-hand buyers ignoring the endowment effect problem. Therefore, this study examined whether second-hand market exchanges might be faced with an endowment effect, including situations where repairers are recruited to repair possible product defects. The results show significant endowment effects for non-defective products and defective products with a repairer involved, but not for defective products. Furthermore, endowment effects seemed to persist over different product types suggesting that sellers may be reluctant to sell their products because of the value that buyers offer for them, when repairers are easily accessible, thereby impeding transactions from taking place