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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.
Cum id fugiunt, re eadem defendunt, quae Peripatetici, verba. Nam quid possumus facere melius? At ego quem huic anteponam non audeo dicere; Sit, inquam, tam facilis, quam vultis, comparatio voluptatis, quid de dolore dicemus? Non quam nostram quidem, inquit Pomponius iocans; Ergo in gubernando nihil, in officio plurimum interest, quo in genere peccetur. Quis non odit sordidos, vanos, leves, futtiles? Nec mihi illud dixeris: Haec enim ipsa mihi sunt voluptati, et erant illa Torquatis. Ita similis erit ei finis boni, atque antea fuerat, neque idem tamen; Roges enim Aristonem, bonane ei videantur haec: vacuitas doloris, divitiae, valitudo; Quonam, inquit, modo? Quod eo liquidius faciet, si perspexerit rerum inter eas verborumne sit controversia.
Si quidem, inquit, tollerem, sed relinquo. Quae diligentissime contra Aristonem dicuntur a Chryippo. Equidem e Cn. Egone non intellego, quid sit don Graece, Latine voluptas?
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
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Ab his oratores, ab his imperatores ac rerum publicarum principes extiterunt. Sic enim censent, oportunitatis esse beate vivere. Aut unde est hoc contritum vetustate proverbium: quicum in tenebris? At miser, si in flagitiosa et vitiosa vita afflueret voluptatibus. Tecum optime, deinde etiam cum mediocri amico. Iubet igitur nos Pythius Apollo noscere nosmet ipsos. At quanta conantur! Mundum hunc omnem oppidum esse nostrum! Incendi igitur eos, qui audiunt, vides. Non est igitur voluptas bonum. Cur iustitia laudatur? Cenasti in vita numquam bene, cum omnia in ista Consumis squilla atque acupensere cum decimano.
Nam si amitti vita beata potest, beata esse non potest. Cur igitur easdem res, inquam, Peripateticis dicentibus verbum nullum est, quod non intellegatur? Non quaero, quid dicat, sed quid convenienter possit rationi et sententiae suae dicere. An potest, inquit ille, quicquam esse suavius quam nihil dolere? Quod equidem non reprehendo; Videmusne ut pueri ne verberibus quidem a contemplandis rebus perquirendisque deterreantur? Tu vero, inquam, ducas licet, si sequetur; Aliam vero vim voluptatis esse, aliam nihil dolendi, nisi valde pertinax fueris, concedas necesse est. Cum autem in quo sapienter dicimus, id a primo rectissime dicitur. Ea possunt paria non esse. In quibus doctissimi illi veteres inesse quiddam caeleste et divinum putaverunt. Ut id aliis narrare gestiant?
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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