0 saved
9.4K views
No, it's not just you — we all tend to overestimate the value of our possessions, and there's a name for it.
Nunc haec primum fortasse audientis servire debemus. Hoc enim constituto in philosophia constituta sunt omnia. Huius, Lyco, oratione locuples, rebus ipsis ielunior. Atque hoc loco similitudines eas, quibus illi uti solent, dissimillimas proferebas. Sed quanta sit alias, nunc tantum possitne esse tanta. Quis hoc dicit? Eaedem res maneant alio modo. Quamquam tu hanc copiosiorem etiam soles dicere.
Quasi vero, inquit, perpetua oratio rhetorum solum, non etiam philosophorum sit. Scripta sane et multa et polita, sed nescio quo pacto auctoritatem oratio non habet. Itaque eos id agere, ut a se dolores, morbos, debilitates repellant. At enim, qua in vita est aliquid mali, ea beata esse non potest. At hoc in eo M. Cum sciret confestim esse moriendum eamque mortem ardentiore studio peteret, quam Epicurus voluptatem petendam putat. Ut placet, inquit, etsi enim illud erat aptius, aequum cuique concedere. Sed erat aequius Triarium aliquid de dissensione nostra iudicare.
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Istam voluptatem, inquit, Epicurus ignorat? Ita cum ea volunt retinere, quae superiori sententiae conveniunt, in Aristonem incidunt; Quae cum magnifice primo dici viderentur, considerata minus probabantur.
Duo Reges: constructio interrete. In quibus doctissimi illi veteres inesse quiddam caeleste et divinum putaverunt. Isto modo ne improbos quidem, si essent boni viri. Eadem nunc mea adversum te oratio est.
Quam si explicavisset, non tam haesitaret. Tu enim ista lenius, hic Stoicorum more nos vexat. Quod iam a me expectare noli. Sed erat aequius Triarium aliquid de dissensione nostra iudicare. Nunc omni virtuti vitium contrario nomine opponitur. Quid turpius quam sapientis vitam ex insipientium sermone pendere?
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.