The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

518. The Endowment Effect: Why We Overvalue What We Own

Jul 29, 2025
Ownership skews our perception of value, making us overvalue what we possess. Explore the Endowment Effect, a cognitive bias that influences personal and professional decisions. Discover how language can trigger feelings of attachment and how this bias impacts customer loyalty in businesses. Gain insights on leveraging this phenomenon in marketing to enhance engagement. With relatable examples and psychological studies, learn why early ownership can foster long-term brand commitment.
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INSIGHT

Language Triggers Ownership Effect

  • The endowment effect causes us to value things more simply because we own them or perceive ownership.
  • Small language tweaks, like switching from 'if' to 'when', can powerfully trigger this sense of ownership in people.
INSIGHT

Ownership Enhances Loss Awareness

  • The endowment effect heightens awareness of potential loss, making us cling to what we own.
  • Even perceived ownership without physical possession can trigger this effect in our brains.
ANECDOTE

Holding onto Unused Credits

  • Melina kept paying for a service plan she barely used to avoid losing accumulated credits.
  • She overvalued the credits because they felt like hers due to the endowment effect.
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