Making decisions in foreign languages: weaker senses of ownership attenuate the endowment effect

Abstract

Although the number of bilingual consumers is expanding, research on the impact of language on consumer decision making is scarce. The current research examines the endowment effect, which is a fundamental consumer decision-making regularity, under native versus foreign language processing. I show that the endowment effect, which refers to higher valuation of a given product by sellers than buyers, is attenuated when sellers and buyers process information in a foreign language due to a decrease in sellers' valuation of the product. I further document empirical evidence for the underlying mechanism of this finding. Thinking in a foreign language diminishes the impact of affective reactions on sellers' judgment, which results in lowered sense of psychological ownership. This lowered sense of psychological ownership significantly decreases sellers' valuation to a level comparable to the valuation of buyers. The implications of these results for theory and practice, and avenues for future research are discussed.