Week 6 (13th November post): Endowment Effect

Having read the article named Aspects of Endowment, by Johnson, Häubel & Keinan (full reference: Johnson, E.J., Häubel, G., & Keinan, A. (2007). Aspects of endowment: A query theory of value construction. Journal of Experimental Psychology: Learning, Memory, and Cognition, 33 (3), 461-474. [click to download pdf]), some things become clear: People attach more value to whatever belongs to them, even if it has just been given to them, and thus the "emotional attachment" due after lengthy periods of possession time is non existent.

That means that (following the classical experiments), if you are given a mug, you will attribute it a higher value than what you (or an "equal") would pay for it, even if you have had that mug for a mere minute.

Also, that could explain the loss aversion effect that is shown/explained several times, in which people tend to make more conservative choices once they have the "item" (let it be money, mugs, air guitars, knowledge?), by means of not wanting to lose what it's "yours", thus sometimes not making the rational choice (a nice video on this here (which is the same one we added on our wiki page)