Ownership BiasOpen Access

Ownership Bias

We value things more when we feel we own them

We’re willing to pay more for and are increasingly reluctant to exchange what we sense is ours, next to an exact same item that we don’t own.

Knetsch, J. L. (1989). The endowment effect and evidence of nonreversible indifference curves. The American Economic Review, 79(5), 1277-1284.

The study

Setup

218 people were split into 3 groups, given either a coffee mug or a chocolate bar and told they could swap their item for the other; or given neither and told they could choose either.

Results

Those who’d been endowed with either item were far more likely to stick with it than those who were given neither.

Study graph

Key Takeaways

Perceived ownership is powerful, allowing consumers to attribute increased value and emotional connection on what you’re offering, creating a strong desire to buy that increases over time.

Takeaway image

It’s driven by a price gap between how much we’re willing to pay for an item and the price we’re willing to sell it for. This is due to a mix of Loss AversionFraming (i.e. buyer or seller) and the evolutionary advantage of overvaluing our tradable possessions. Doing so increases our resources and chances of survival.   

Takeaway image

Allow people to feel ownership of a product prior to purchase. Examples include: making it effortless to add that product to their basket, visually personalizing a product early in the ordering process, highlighting how soon it could be at your door or allowing free week-long test drives of that car you’ve always wanted.

Takeaway image
Takeaway image
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Ownership Bias

Ownership Bias

We value things more when we feel we own them

We’re willing to pay more for and are increasingly reluctant to exchange what we sense is ours, next to an exact same item that we don’t own.

The study

Setup

218 people were split into 3 groups, given either a coffee mug or a chocolate bar and told they could swap their item for the other; or given neither and told they could choose either.

Results

Those who’d been endowed with either item were far more likely to stick with it than those who were given neither.

study graph
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In detail

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A loss hurts more than an equal gain feels good

Reciprocity

Reciprocity

We’re hardwired to return kindness received

Framing

Framing

We make very different decisions based on how a fact is presented

Loss Aversion

Loss Aversion

We feel more negative when losing something than positive when we gain it

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Default Effect

We tend to accept the option pre-chosen for us

Anchoring

Anchoring

What we see first affects our judgement of everything thereafter

Fast & Slow Thinking

Fast & Slow Thinking

We make knee-jerk spontaneous decisions that can cause regretful damage

Salience

Salience

Our choices are determined by the information we're shown

Connected to

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Risk Aversion
We don’t like uncertainty and generally stick to what we know

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We don’t like uncertainty and generally stick to what we know
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