The Endowment Effect

Drawing of a teacup and saucer with a card showing regular price and sale price.

We overvalue the things we own. This is fine when it’s a family keepsake or memento – but how does this influence decisions we make about our homes, investments, and more?

References

Anagol, S., Balasubramaniam, V., & Ramadorai, T. (2016). Endowment Effects in the Field: Evidence from India’s IPO Lotteries. CEPR Discussion Paper No. DP11328. Available at SSRN.

Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1990). Experimental tests of the endowment effect and the Coase theorem. Journal of Political Economy, 98(6), 1325-1348.

Credits

Irrational Attachment was created and developed by Mahzarin Banaji and Olivia Kang with funding from PwC and Harvard University.

Narration by Olivia Kang, featuring Professor Santosh Anagol (The Wharton School at the University of Pennsylvania)

Sound Editing & Mixing by Evan Younger

Music by Miracles of Modern Science

Artwork by Olivia Kang

Research Assistant: Timothy Carroll