[ThinkBetter](https://thinkbetter.app/) → [Cognitive Biases](https://thinkbetter.app/cognitive-biases.md) → Endowment Effect

# Endowment Effect

We value things more just because we own them. 

![Endowment Effect illustration](https://assets.thinkbetter.app/images/endowment_effect.png)

The endowment effect is a cognitive bias that causes individuals to ascribe higher value to things merely because they own them. This phenomenon was first named and identified by economists Richard Thaler, Daniel Kahneman, and Jack Knetsch in the early 1990s. They conducted experiments showing that people demanded a much higher price to give up objects they owned than they would be willing to pay to acquire the same objects if they did not own them. This bias stems from a sense of loss aversion and personal attachment; the idea of losing something we own feels more significant than the potential joy of gaining something of equivalent value. For example, a person might be reluctant to sell a car they own at market price because they overvalue it due to their personal connection to it. This is why you’d find it similar to Loss Aversion in some of it’s importance and consequences.

## Example

**Real Estate Pricing**

A homeowner might insist on a selling price for their house that is above market value because of their emotional attachment and overestimation of its worth. Why? They perceive the value of their home through the lens of personal memories and experiences, not just its market value.

## In your professional life

**Reassess Skills and Work Methods**

Regularly reassess the value of your skills and work methods, being open to new approaches even if you're comfortable with the current ones. For example, if you’re a graphic designer, periodically review emerging design trends and software updates. Even if your current methods are effective, staying open to new tools and techniques can enhance your creativity and efficiency.

## Go deeper in ThinkBetter

The ThinkBetter app has the full Endowment Effect deep-dive: more examples, a quiz to test yourself, audio narration, and a weekly path that builds these ideas into a habit.

- iOS: https://apps.apple.com/app/id6459831884
- Android: https://play.google.com/store/apps/details?id=io.ventureship.braintricks

### Related concepts

- [Scarcity Bias](https://thinkbetter.app/cognitive-biases/scarcity-bias.md)
- [Sunk Cost Fallacy](https://thinkbetter.app/cognitive-biases/sunk-cost-fallacy.md)
- [All mental models](https://thinkbetter.app/mental-models.md)

Page: https://thinkbetter.app/cognitive-biases/endowment-effect