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No, it's not just you — we all tend to overestimate the value of our possessions, and there's a name for it.
Sed utrum hortandus es nobis, Luci, inquit, an etiam tua sponte propensus es? Quid ergo aliud intellegetur nisi uti ne quae pars naturae neglegatur? Illum mallem levares, quo optimum atque humanissimum virum, Cn. An ea, quae per vinitorem antea consequebatur, per se ipsa curabit? Quid enim mihi potest esse optatius quam cum Catone, omnium virtutum auctore, de virtutibus disputare? Quod dicit Epicurus etiam de voluptate, quae minime sint voluptates, eas obscurari saepe et obrui. Tu autem negas fortem esse quemquam posse, qui dolorem malum putet. Poterat autem inpune;
Quae diligentissime contra Aristonem dicuntur a Chryippo. Cur post Tarentum ad Archytam? Nam, ut sint illa vendibiliora, haec uberiora certe sunt.
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Virtutis, magnitudinis animi, patientiae, fortitudinis fomentis dolor mitigari solet. Nam si beatus umquam fuisset, beatam vitam usque ad illum a Cyro extructum rogum pertulisset. Quae cum ita sint, effectum est nihil esse malum, quod turpe non sit. Cum id fugiunt, re eadem defendunt, quae Peripatetici, verba. Duo Reges: constructio interrete. Qui-vere falsone, quaerere mittimus-dicitur oculis se privasse;
Idem iste, inquam, de voluptate quid sentit? Cur tantas regiones barbarorum pedibus obiit, tot maria transmisit? Sed quot homines, tot sententiae; Nulla erit controversia. Illi enim inter se dissentiunt. Mihi enim erit isdem istis fortasse iam utendum. Polemoni et iam ante Aristoteli ea prima visa sunt, quae paulo ante dixi. Quid ergo hoc loco intellegit honestum? Quod autem in homine praestantissimum atque optimum est, id deseruit. Cum ageremus, inquit, vitae beatum et eundem supremum diem, scribebamus haec. Et quod est munus, quod opus sapientiae?
Egone non intellego, quid sit don Graece, Latine voluptas? An nisi populari fama? Nihil opus est exemplis hoc facere longius. Sed ille, ut dixi, vitiose. Est autem a te semper dictum nec gaudere quemquam nisi propter corpus nec dolere. Teneo, inquit, finem illi videri nihil dolere.
There have been critics of the Endowment Heuristic, with some claiming it does not exist or at least is not as apparent in real life as in fixed experiments. For example, some argue that the results from the mug experiment (see the ‘In Practice’ section) was more due to artificial scarcity.
Mugs.
This 1991 paper by Daniel Kahneman, Jack Knetcsch and Richard Thaler describes the classic example of the endowment heuristic involving mugs. In it, participants were given a mug and then given the chance to trade it. They found that the value attributed to owned mugs was twice as high as they were actually willing to pay for such a mug that they did not own.
The endowment heuristic is part of behavioural economics, stemming from the fast and slow thinking mental model and relating closely to loss aversion.
Use the following examples of connected and complementary models to weave availability heuristic into your broader latticework of mental models. Alternatively, discover your own connections by exploring the category list above.
Connected models:
- Fast and slow thinking: providing broader context to the endowment effect.
- Loss aversion and opportunity cost: a closely linked heuristic and bias.
- Lock in effect: and challenge of customer loyalty.
Complementary models:
- Design thinking: consider strategies to co-design and increase ownership of initiatives.
- Lean startup: iterating with minimum viable products, allowing audience groups to access and own quickly and cheaply.
Aristotle noted the tendency towards the Endowment Effect in Ancient Greece, when he explained: “For most things are differently valued by those who have them and by those who wish to get them: what belongs to us, and what we give away, always seems very precious to us.”
However, the term itself was first coined by the behavioural economist Richard Thaler in his 1980 paper entitled ‘Toward a Positive Theory of Consumer Choice.’
My Notes
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