M1

Endowment effect

Research. In the famous ‘mug experiment’, participants were given coffee mugs and offered the chance to sell it to participants that did not receive one. Participants that were given a mug valued it at more than double the amount than the other participants who were not given a mug.Simply being ‘endowed’ with the mug, raised how much participants valued it.

Kahneman (1990). Experimental tests of the endowment effect and the Coase theorem.

“Once we take ownership of an idea — We love it perhaps more than we should.”

Pairing. Try combining with (M7) Loss aversion.

Thought starters.

» Enable people to feel ownership over the benefits that come with the behaviour » Remind people what they will lose out on if they give it up » Explain why the offering is exclusive or make it personal