The endowment effect

You may have noticed when you came to visit a friend that there are things that they keep that appear to be of no use but it is still being treasured. If a person is given a choice between $100 and a pair of LeBron James shoes, most likely he would choose the money but if he was given the shoes first and then asked if he would trade it for $100, most likely, the shoes will be chosen.

This is called the endowment effect which most researchers refer to as the poster child of strange behavior. Chimps show this behavior too.

Their research suggests that people are more motivated in protecting their belongings out of fear rather than as enjoyment. Ownership is also another factor. If you are attached to a a certain object like for example your wedding ring or the jersey that won you the MVP award, then the endowment effect becomes more intensified.

So why are we then afraid to lose our stuff? Its not like we will die if we lose that jersey right? But then, our brains may think that we will. There’s a good side to this - we get to know the true worth of our things and not just the monetary value. Our things have a certain good memory attached to them.

*Source: LiveScience.com