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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.
Habent enim et bene longam et satis litigiosam disputationem. Sed quot homines, tot sententiae; Quem Tiberina descensio festo illo die tanto gaudio affecit, quanto L. Dolere malum est: in crucem qui agitur, beatus esse non potest.
Neque solum ea communia, verum etiam paria esse dixerunt. Quonam, inquit, modo? Piso igitur hoc modo, vir optimus tuique, ut scis, amantissimus. At ille non pertimuit saneque fidenter: Istis quidem ipsis verbis, inquit; Iam illud quale tandem est, bona praeterita non effluere sapienti, mala meminisse non oportere? Ex quo, id quod omnes expetunt, beate vivendi ratio inveniri et comparari potest. Hoc est non modo cor non habere, sed ne palatum quidem.
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Quae qui non vident, nihil umquam magnum ac cognitione dignum amaverunt. At ille pellit, qui permulcet sensum voluptate. Ne tum quidem te respicies et cogitabis sibi quemque natum esse et suis voluptatibus? Si enim non fuit eorum iudicii, nihilo magis hoc non addito illud est iudicatum-. Cum sciret confestim esse moriendum eamque mortem ardentiore studio peteret, quam Epicurus voluptatem petendam putat. Praeterea sublata cognitione et scientia tollitur omnis ratio et vitae degendae et rerum gerendarum. Duo Reges: constructio interrete. Non est ista, inquam, Piso, magna dissensio.
Quantam rem agas, ut Circeis qui habitet totum hunc mundum suum municipium esse existimet? Faceres tu quidem, Torquate, haec omnia; Quod autem satis est, eo quicquid accessit, nimium est; Nam illud vehementer repugnat, eundem beatum esse et multis malis oppressum. Tanti autem aderant vesicae et torminum morbi, ut nihil ad eorum magnitudinem posset accedere. Quia dolori non voluptas contraria est, sed doloris privatio. Claudii libidini, qui tum erat summo ne imperio, dederetur. Res enim se praeclare habebat, et quidem in utraque parte. Quam illa ardentis amores excitaret sui! Cur tandem? Quodsi vultum tibi, si incessum fingeres, quo gravior viderere, non esses tui similis;
Minime vero, inquit ille, consentit. Istam voluptatem perpetuam quis potest praestare sapienti? Quae cum ita sint, effectum est nihil esse malum, quod turpe non sit. Hoc est dicere: Non reprehenderem asotos, si non essent asoti. Sed haec quidem liberius ab eo dicuntur et saepius. Nihil ad rem! Ne sit sane; A mene tu? Virtutis, magnitudinis animi, patientiae, fortitudinis fomentis dolor mitigari solet. Quis hoc dicit? Hoc est non dividere, sed frangere.
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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