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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.
At iam decimum annum in spelunca iacet. At vero illa, quae Peripatetici, quae Stoici dicunt, semper tibi in ore sunt in iudiciis, in senatu. Scaevola tribunus plebis ferret ad plebem vellentne de ea re quaeri. Quod non faceret, si in voluptate summum bonum poneret. Nondum autem explanatum satis, erat, quid maxime natura vellet. Idemque diviserunt naturam hominis in animum et corpus. Quod praeceptum quia maius erat, quam ut ab homine videretur, idcirco assignatum est deo. Quod quidem nobis non saepe contingit.
Zenonis est, inquam, hoc Stoici. Nihil enim hoc differt. Praeclare enim Plato: Beatum, cui etiam in senectute contigerit, ut sapientiam verasque opiniones assequi possit. Tibi hoc incredibile, quod beatissimum. Transfer idem ad modestiam vel temperantiam, quae est moderatio cupiditatum rationi oboediens. Cui Tubuli nomen odio non est?
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Igitur neque stultorum quisquam beatus neque sapientium non beatus. Illud non continuo, ut aeque incontentae. Quasi ego id curem, quid ille aiat aut neget. Nam memini etiam quae nolo, oblivisci non possum quae volo. Tu vero, inquam, ducas licet, si sequetur; Facit enim ille duo seiuncta ultima bonorum, quae ut essent vera, coniungi debuerunt;
Illud mihi a te nimium festinanter dictum videtur, sapientis omnis esse semper beatos; At certe gravius. In quibus doctissimi illi veteres inesse quiddam caeleste et divinum putaverunt. Duo enim genera quae erant, fecit tria. Materiam vero rerum et copiam apud hos exilem, apud illos uberrimam reperiemus. Itaque ad tempus ad Pisonem omnes. Sint ista Graecorum; Tubulum fuisse, qua illum, cuius is condemnatus est rogatione, P. Sed eum qui audiebant, quoad poterant, defendebant sententiam suam. Quae cum ita sint, effectum est nihil esse malum, quod turpe non sit. An eum discere ea mavis, quae cum plane perdidiceriti nihil sciat? Egone non intellego, quid sit don Graece, Latine voluptas?
Duo Reges: constructio interrete. Quos quidem tibi studiose et diligenter tractandos magnopere censeo. Quae fere omnia appellantur uno ingenii nomine, easque virtutes qui habent, ingeniosi vocantur. Aliter enim explicari, quod quaeritur, non potest. Sed virtutem ipsam inchoavit, nihil amplius.
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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