Endowment Effect

Explanations > Theories > Endowment Effect

Description | Example | So What? | See also | References 

Description

When I own something, I will tend to value it more highly. If I have to sell it, I will probably want to ask more than it is really worth.

Example

Look around your house. Pick something. How much would you sell it for? How much would people really pay for it? How much would you pay for something like this at a second-hand store? The contents of your house are more valuable to you than other people. 

So what?

Using it

When you want somebody to feel well-off, get them to total up their net worth.

Defending

When you are buying something, take along a neutral sales guide to show people what they are selling is really worth.

See also

Prospect Theory

References

Thaler (1980)

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