0 saved
9.6K views
No, it's not just you — we all tend to overestimate the value of our possessions, and there's a name for it.
Illa sunt similia: hebes acies est cuipiam oculorum, corpore alius senescit; Utrum igitur tibi litteram videor an totas paginas commovere? Quid de Pythagora? Sit hoc ultimum bonorum, quod nunc a me defenditur; Atqui iste locus est, Piso, tibi etiam atque etiam confirmandus, inquam; Sed erat aequius Triarium aliquid de dissensione nostra iudicare. Causa autem fuit huc veniendi ut quosdam hinc libros promerem. Quantum Aristoxeni ingenium consumptum videmus in musicis? Quamquam id quidem, infinitum est in hac urbe; Et ego: Piso, inquam, si est quisquam, qui acute in causis videre soleat quae res agatur.
Fortemne possumus dicere eundem illum Torquatum? Huius ego nunc auctoritatem sequens idem faciam. Quamquam non negatis nos intellegere quid sit voluptas, sed quid ille dicat. Sin tantum modo ad indicia veteris memoriae cognoscenda, curiosorum. In quo etsi est magnus, tamen nova pleraque et perpauca de moribus. Consequens enim est et post oritur, ut dixi. Hi curatione adhibita levantur in dies, valet alter plus cotidie, alter videt. Non est enim vitium in oratione solum, sed etiam in moribus. Omnia contraria, quos etiam insanos esse vultis.
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ergo ita: non posse honeste vivi, nisi honeste vivatur? Varietates autem iniurasque fortunae facile veteres philosophorum praeceptis instituta vita superabat. Multa sunt dicta ab antiquis de contemnendis ac despiciendis rebus humanis; Itaque sensibus rationem adiunxit et ratione effecta sensus non reliquit. Duo Reges: constructio interrete. Nam Pyrrho, Aristo, Erillus iam diu abiecti.
Hic nihil fuit, quod quaereremus. Haec dicuntur fortasse ieiunius; Quasi ego id curem, quid ille aiat aut neget. Quod, inquit, quamquam voluptatibus quibusdam est saepe iucundius, tamen expetitur propter voluptatem. Gracchum patrem non beatiorem fuisse quam fillum, cum alter stabilire rem publicam studuerit, alter evertere. Bona autem corporis huic sunt, quod posterius posui, similiora. Non risu potius quam oratione eiciendum?
An vero displicuit ea, quae tributa est animi virtutibus tanta praestantia? Quae cum magnifice primo dici viderentur, considerata minus probabantur. At iam decimum annum in spelunca iacet. Verba tu fingas et ea dicas, quae non sentias? Non quaero, quid dicat, sed quid convenienter possit rationi et sententiae suae dicere. Atqui reperies, inquit, in hoc quidem pertinacem;
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
Oops, That’s Members’ Only!
Fortunately, it only costs US$5/month to Join ModelThinkers and access everything so that you can rapidly discover, learn, and apply the world’s most powerful ideas.
ModelThinkers membership at a glance:
“Yeah, we hate pop ups too. But we wanted to let you know that, with ModelThinkers, we’re making it easier for you to adapt, innovate and create value. We hope you’ll join us and the growing community of ModelThinkers today.”
You Might Also Like:
- Actionable summaries of the world's most powerful ideas.
Subscribe now and download this practical guide to transform your thinking, plus recieve one short, powerful and actionable idea in your inbox each month.