I think the Endowment effect plays an even larger role in scenarios when the potential gain is uncertain. For example, if I offered you to trade your mug for my lottery ticket, instead of a pen - the value of the lottery ticket (expected gain) would probably have to be quite a bit higher than the value of the pen. Just curious what you think about that!
That's an interesting question, because it combines several biases: the endowment effect, and our tendency to overestimate the probability of winning a large amount of money — such as when buying lottery tickets. I'd say people would rather have something with full certainty than speculating on a big gain. There are sayings for this in a number of languages actually.
Thanks for sharing, Alejandro. As I’ve said on another post, I’m trying to limit purchases to experience purchasing but I definitely see this impact on things I already own and value (even if the value is only perceived by me). 😅
That additional value that only owners see is what I like to call the ‘emotional premium’. What is it that you wouldn’t sell even above its market price?
My tea sets, family heirlooms, precious books. My list probably could be quite long. I like only to keep things that have a place but I do like the things I have! That "emotional premium" is high (maybe nonsensical in terms of "value" but what is value anyway?) What about you? What wouldn't you sell?
I absolutely agree. The concept of value should probably be revisited by economists. That premium often hides priceless memories. Besides my car, I wouldn’t sell my piano or my paintings — though it would really depend on the bid price for the paintings 😅
Oh how amazing! Do you play the piano? Did you inherit the paintings, support local artists, something else, or paint them yourself? Perhaps differently to you, I have zero attachment to my car. Hehe!
How interesting! I have zero musical talent and no musical ear at all. However, I have painted with acrylic and have painted since I was around fifteen, but I left all but two paintings with my ex-husband when I moved back to England. I do still have all manner of painting supplies and blank canvasses but haven't painted for some time now – maybe one day I'll start again.
I think the Endowment effect plays an even larger role in scenarios when the potential gain is uncertain. For example, if I offered you to trade your mug for my lottery ticket, instead of a pen - the value of the lottery ticket (expected gain) would probably have to be quite a bit higher than the value of the pen. Just curious what you think about that!
That's an interesting question, because it combines several biases: the endowment effect, and our tendency to overestimate the probability of winning a large amount of money — such as when buying lottery tickets. I'd say people would rather have something with full certainty than speculating on a big gain. There are sayings for this in a number of languages actually.
Thanks for sharing, Alejandro. As I’ve said on another post, I’m trying to limit purchases to experience purchasing but I definitely see this impact on things I already own and value (even if the value is only perceived by me). 😅
Thanks for reading Elaine :)
That additional value that only owners see is what I like to call the ‘emotional premium’. What is it that you wouldn’t sell even above its market price?
My tea sets, family heirlooms, precious books. My list probably could be quite long. I like only to keep things that have a place but I do like the things I have! That "emotional premium" is high (maybe nonsensical in terms of "value" but what is value anyway?) What about you? What wouldn't you sell?
I absolutely agree. The concept of value should probably be revisited by economists. That premium often hides priceless memories. Besides my car, I wouldn’t sell my piano or my paintings — though it would really depend on the bid price for the paintings 😅
Oh how amazing! Do you play the piano? Did you inherit the paintings, support local artists, something else, or paint them yourself? Perhaps differently to you, I have zero attachment to my car. Hehe!
I do. I started to play when I was 19, and it’s one of my favourite things to do.
They’re my paintings. I took up acrylic painting some months ago and I it gets me into a state of flow. I paint for hours and I lose track of time!
Do you make art or play any musical instrument?
How interesting! I have zero musical talent and no musical ear at all. However, I have painted with acrylic and have painted since I was around fifteen, but I left all but two paintings with my ex-husband when I moved back to England. I do still have all manner of painting supplies and blank canvasses but haven't painted for some time now – maybe one day I'll start again.