The Endowment Effect, Part 2
There is a staple of a certain kind of movie in which two people who are basically opposite of each other are forced to spend time together because of one circumstance or another. They start off hating each other, but by the end of the movie they have become tolerant of one another, maybe even friends. Does that happen in real life?
I think it does. Consider married couples, for instance. Studies show that couples in arranged marriages are no less happy than those who chose their own spouse. There could be several reasons for this phenomenon. The fact that married couples go through so many shared experiences is certainly one of them. "Shared experience" is a sort of psychological buzzword, but I have found that it is a powerful force in my own life. It's something that you can look back on and talk about, and some time that you probably experienced similar emotions with another person. I have even read that taking a date to a scary movie is a good strategy, because the strong emotion of fear helps you to bond with each other.
What about objects? I think of the beat-up baseball glove that a person might value much more than a newer one because it is the one he had throughout Little League, or the barely functioning truck in which a father and son went fishing many times. These kinds of objects become invested with meaning because they relate to experiences in your life and remind you of what you have been through.
I suspect, however, that there is another mechanism at play in the way that we become attached to people and objects that we have been around for a long time. Imagine you are in an unhappy marriage, but for whatever reason -- shame associated with divorce, fear of the unknown, etc. -- you stay with your spouse for 50 years. It seems likely that your mind would begin to justify your behaviour after a time; not consciously, but subtly and in small ways. Does your mind want to admit that you have wasted your life with the wrong person? Or would it rather conclude that there was something about this person after all that made him or her the right match?
Or think of a writer who was too poor to afford a computer for a long time, and wrote many works on a typewriter. He may have resented that typewriter the whole time, wishing he could have had a word processing program instead. However, he may also develope an attachment to the typewriter. He had it; it worked for him; maybe it was the right thing for him. And maybe it was, but more likely his mind is simply justifying the fact that he had to waste hours retyping pages because he couldn't go back and edit what he had written.
I don't want to suggest that there isn't a real element of affection to these sorts of people and objects, because I have no doubt that it can and does exist. I just think that our minds are likely to think that whatever we have had for a long time must have been the right thing for us, because the alternative is acknowledging that we wasted time with the wrong person or with a poor tool. And so I think the Endowment Effect, in which people value things they own over identical things they don't own, is explicable partly from ordinary psychological reasons.
The example I gave in the last entry was a class of students who were given coffee mugs. They would sell their mugs for a minimum of (say) $5, but they would not buy a mug for more than $2, which puzzles economists. I think their behaviour is rational partly because of this normal psychological mechanism that causes us to think that whatever we have must be valuable, otherwise we wouldn't have acquired it. The effect cannot, of course, explain why we would value a small coffee mug that we were given 5 minutes ago so much more than an identical one that we could buy now. However, I think the psychology behind ownership is built into our brains. If we have had to use an object for a long time, it is understandable if we develope an attachment to it, but it seems likely to me that our brains are already hard-wired to make the choices that we might make anyway for reasons of self-preservation. What seems irrational behaviour over a coffee mug is probably a remnant of a much more rational behaviour that our brain applies to all objects that we own, even if the surrounding circumstances are quite different.
I think it does. Consider married couples, for instance. Studies show that couples in arranged marriages are no less happy than those who chose their own spouse. There could be several reasons for this phenomenon. The fact that married couples go through so many shared experiences is certainly one of them. "Shared experience" is a sort of psychological buzzword, but I have found that it is a powerful force in my own life. It's something that you can look back on and talk about, and some time that you probably experienced similar emotions with another person. I have even read that taking a date to a scary movie is a good strategy, because the strong emotion of fear helps you to bond with each other.
What about objects? I think of the beat-up baseball glove that a person might value much more than a newer one because it is the one he had throughout Little League, or the barely functioning truck in which a father and son went fishing many times. These kinds of objects become invested with meaning because they relate to experiences in your life and remind you of what you have been through.
I suspect, however, that there is another mechanism at play in the way that we become attached to people and objects that we have been around for a long time. Imagine you are in an unhappy marriage, but for whatever reason -- shame associated with divorce, fear of the unknown, etc. -- you stay with your spouse for 50 years. It seems likely that your mind would begin to justify your behaviour after a time; not consciously, but subtly and in small ways. Does your mind want to admit that you have wasted your life with the wrong person? Or would it rather conclude that there was something about this person after all that made him or her the right match?
Or think of a writer who was too poor to afford a computer for a long time, and wrote many works on a typewriter. He may have resented that typewriter the whole time, wishing he could have had a word processing program instead. However, he may also develope an attachment to the typewriter. He had it; it worked for him; maybe it was the right thing for him. And maybe it was, but more likely his mind is simply justifying the fact that he had to waste hours retyping pages because he couldn't go back and edit what he had written.
I don't want to suggest that there isn't a real element of affection to these sorts of people and objects, because I have no doubt that it can and does exist. I just think that our minds are likely to think that whatever we have had for a long time must have been the right thing for us, because the alternative is acknowledging that we wasted time with the wrong person or with a poor tool. And so I think the Endowment Effect, in which people value things they own over identical things they don't own, is explicable partly from ordinary psychological reasons.
The example I gave in the last entry was a class of students who were given coffee mugs. They would sell their mugs for a minimum of (say) $5, but they would not buy a mug for more than $2, which puzzles economists. I think their behaviour is rational partly because of this normal psychological mechanism that causes us to think that whatever we have must be valuable, otherwise we wouldn't have acquired it. The effect cannot, of course, explain why we would value a small coffee mug that we were given 5 minutes ago so much more than an identical one that we could buy now. However, I think the psychology behind ownership is built into our brains. If we have had to use an object for a long time, it is understandable if we develope an attachment to it, but it seems likely to me that our brains are already hard-wired to make the choices that we might make anyway for reasons of self-preservation. What seems irrational behaviour over a coffee mug is probably a remnant of a much more rational behaviour that our brain applies to all objects that we own, even if the surrounding circumstances are quite different.
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