EffectProspect Theory · Entry 75
Endowment Effect – when what’s yours feels more valuable
Would you sell something only for much more than you’d be willing to pay for it? That’s Endowment Effect – the tendency to overvalue things just because you own them.
Where it can show up
- Selling items – people demand more for things they own than they would pay for the same item.
- Business & negotiations – sellers believe their offers are worth more than buyers are willing to pay.
- Shopping – free trials make people feel ownership, making them less likely to return the product.
A practical countermeasure
- Assess items objectively – ask yourself if you’d buy it for the price you’re asking.
- Separate emotions from value – just owning something doesn’t make it worth more.
- Be wary of free trials – businesses know you’ll feel attached once you start using a product.