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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.
Qui-vere falsone, quaerere mittimus-dicitur oculis se privasse; Itaque haec cum illis est dissensio, cum Peripateticis nulla sane. Vadem te ad mortem tyranno dabis pro amico, ut Pythagoreus ille Siculo fecit tyranno? Ex ea difficultate illae fallaciloquae, ut ait Accius, malitiae natae sunt. Neutrum vero, inquit ille. Ita fit cum gravior, tum etiam splendidior oratio. Si est nihil nisi corpus, summa erunt illa: valitudo, vacuitas doloris, pulchritudo, cetera.
Quid, quod res alia tota est? Paulum, cum regem Persem captum adduceret, eodem flumine invectio? Ergo illi intellegunt quid Epicurus dicat, ego non intellego? Istam voluptatem perpetuam quis potest praestare sapienti? Earum etiam rerum, quas terra gignit, educatio quaedam et perfectio est non dissimilis animantium. At ille non pertimuit saneque fidenter: Istis quidem ipsis verbis, inquit;
- Be mindful of the endowment heuristic in sales conversations.
When purchasing something, be aware ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Quis enim redargueret? Praeteritis, inquit, gaudeo. Hoc non est positum in nostra actione. Duo Reges: constructio interrete. Nonne videmus quanta perturbatio rerum omnium consequatur, quanta confusio? Quid de Pythagora? Tum Piso: Atqui, Cicero, inquit, ista studia, si ad imitandos summos viros spectant, ingeniosorum sunt;
Philosophi autem in suis lectulis plerumque moriuntur. Materiam vero rerum et copiam apud hos exilem, apud illos uberrimam reperiemus. Audax negotium, dicerem impudens, nisi hoc institutum postea translatum ad philosophos nostros esset. Faceres tu quidem, Torquate, haec omnia; Nunc omni virtuti vitium contrario nomine opponitur.
Itaque primos congressus copulationesque et consuetudinum instituendarum voluntates fieri propter voluptatem; Cum enim summum bonum in voluptate ponat, negat infinito tempore aetatis voluptatem fieri maiorem quam finito atque modico. Ab hoc autem quaedam non melius quam veteres, quaedam omnino relicta. Quod autem in homine praestantissimum atque optimum est, id deseruit.
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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