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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.
Miserum hominem! Si dolor summum malum est, dici aliter non potest. Rhetorice igitur, inquam, nos mavis quam dialectice disputare? Quo modo autem philosophus loquitur? O magnam vim ingenii causamque iustam, cur nova existeret disciplina! Perge porro. Videmusne ut pueri ne verberibus quidem a contemplandis rebus perquirendisque deterreantur? Longum est enim ad omnia respondere, quae a te dicta sunt. Quo plebiscito decreta a senatu est consuli quaestio Cn. Quicquid porro animo cernimus, id omne oritur a sensibus; Nec vero sum nescius esse utilitatem in historia, non modo voluptatem. Is ita vivebat, ut nulla tam exquisita posset inveniri voluptas, qua non abundaret. Heri, inquam, ludis commissis ex urbe profectus veni ad vesperum. Hoc non est positum in nostra actione.
Qui-vere falsone, quaerere mittimus-dicitur oculis se privasse; Traditur, inquit, ab Epicuro ratio neglegendi doloris. Quamquam te quidem video minime esse deterritum. Et harum quidem rerum facilis est et expedita distinctio. An me, inquam, nisi te audire vellem, censes haec dicturum fuisse? Quae si potest singula consolando levare, universa quo modo sustinebit? Portenta haec esse dicit, neque ea ratione ullo modo posse vivi; Tecum optime, deinde etiam cum mediocri amico. Quid in isto egregio tuo officio et tanta fide-sic enim existimo-ad corpus refers?
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
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Aliter homines, aliter philosophos loqui putas oportere? Cum id quoque, ut cupiebat, audivisset, evelli iussit eam, qua erat transfixus, hastam. Praeclare enim Plato: Beatum, cui etiam in senectute contigerit, ut sapientiam verasque opiniones assequi possit. Hoc loco discipulos quaerere videtur, ut, qui asoti esse velint, philosophi ante fiant.
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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