{"id":59727,"date":"2022-02-08T14:10:00","date_gmt":"2022-02-08T18:10:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=59727"},"modified":"2022-02-14T13:01:48","modified_gmt":"2022-02-14T17:01:48","slug":"what-is-the-endowment-effect","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/","title":{"rendered":"The Endowment Effect: What It Is and Why It Happens"},"content":{"rendered":"\n<p>What is <a href=\"https:\/\/www.shortform.com\/blog\/the-endowment-effect\/\">the endowment effect<\/a>? Why does it occur?<\/p>\n\n\n\n<p>The endowment effect is the tendency to assign a higher value to an item because it belongs to you. The endowment effect stems from loss aversion. Once something is in your possession, you fear losing it, which makes you value the item more.<\/p>\n\n\n\n<p>Keep reading to learn about the psychology behind the endowment effect.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-endowment-effect\"><strong>The Endowment Effect<\/strong><\/h2>\n\n\n\n<p>What is the endowment effect? The endowment effect is the first illogical shift in your valuation of an item\u2014when you own an item, you subconsciously increase its value simply because it&#8217;s yours.<\/p>\n\n\n\n<p>The endowment effect makes buying and selling things difficult, Dobelli adds, because you inflate the value of an item to be higher than others value it. You\u2019ll even turn down generous offers for the item because you\u2019ve mistakenly increased its value so much.<\/p>\n\n\n\n<p>The endowment effect also influences people who don\u2019t own an item yet, Dobelli says. <strong>Even the anticipation of owning an item can make you subconsciously increase its value<\/strong>, especially if you\u2019re in competition for the item. (Shortform note: <a href=\"https:\/\/shortform.com\/app\/book\/predictably-irrational\/1-page-summary\">This tendency is called \u201cvirtual ownership.\u201d<\/a> It\u2019s manipulated through advertisements, which let you <em>imagine<\/em> ownership of an item by showing you what it\u2019s like to own it, and trial periods, which let you own an item for a limited time.)<\/p>\n\n\n\n<p>How can you overcome the endowment effect? Dobelli suggests <strong>thinking of your possessions as things you only have temporarily.<\/strong> This lessens your sentimental attachment to the items.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Overcoming the Endowment Effect: Think Like a Vendor?<\/strong><br><br>While Dobelli believes the endowment effect influences anyone who owns an item, others argue that <a href=\"https:\/\/www.shortform.com\/app\/book\/thinking-fast-and-slow\/part-4-3\">it only activates when you\u2019re going to <em>use <\/em>the item<\/a>. If you have an item for the sole purpose of exchanging it, the endowment effect doesn\u2019t apply. This is how vendors are immune to the endowment effect and can sell goods at fair prices.<br><br>Since accurately valuing and selling items is difficult only when they\u2019re personal items, if you avoid attachment by viewing your belongings like a vendor views their stock, you\u2019ll have a more accurate idea of their value. However, avoiding connection to items in this way <a href=\"https:\/\/thepsychologist.bps.org.uk\/volume-26\/edition-8\/psychology-stuff-and-things\">may harm your well-being.<\/a> Valued belongings become an extension of your identity and a way to express your personality, and preventing those connections from forming can make you feel stifled and unable to be yourself.<\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>What is the endowment effect? Why does it occur? The endowment effect is the tendency to assign a higher value to an item because it belongs to you. The endowment effect stems from loss aversion. Once something is in your possession, you fear losing it, which makes you value the item more. Keep reading to learn about the psychology behind the endowment effect.<\/p>\n","protected":false},"author":7,"featured_media":668,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9,160],"tags":[576],"class_list":["post-59727","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-psychology","category-science","tag-the-art-of-thinking-clearly","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Endowment Effect: What It Is and Why It Happens - Shortform Books<\/title>\n<meta name=\"description\" content=\"What is the endowment effect? When you own an item, you subconsciously increase its value because it belongs to you. Learn more.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Endowment Effect: What It Is and Why It Happens\" \/>\n<meta property=\"og:description\" content=\"What is the endowment effect? When you own an item, you subconsciously increase its value because it belongs to you. Learn more.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2022-02-08T18:10:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-02-14T17:01:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2019\/07\/power-of-now-true-self.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"384\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Darya Sinusoid\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Darya Sinusoid\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/\"},\"author\":{\"name\":\"Darya Sinusoid\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/0421cce75bc249b11e2517b3a91f9c46\"},\"headline\":\"The Endowment Effect: What It Is and Why It Happens\",\"datePublished\":\"2022-02-08T18:10:00+00:00\",\"dateModified\":\"2022-02-14T17:01:48+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/\"},\"wordCount\":414,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2019\/07\/power-of-now-true-self.jpg\",\"keywords\":[\"The Art of Thinking Clearly\"],\"articleSection\":[\"Psychology\",\"Science\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/\",\"name\":\"The Endowment Effect: What It Is and Why It Happens - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/what-is-the-endowment-effect\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2019\/07\/power-of-now-true-self.jpg\",\"datePublished\":\"2022-02-08T18:10:00+00:00\",\"dateModified\":\"2022-02-14T17:01:48+00:00\",\"description\":\"What is the endowment effect? 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