Heuristics and biases

Endowment Effect

We demand more in exchange for something that's already ours.

We ask more money to sell something that's already ours than we'd pay to buy exactly the same thing. The simple fact of owning an object increases how much we value it.

The case

In a classic experiment, half of the participants were given a mug and asked how much they'd sell it for. The other half, who didn't receive a mug, were asked how much they'd pay to buy one. The selling price asked by those who already had the mug was systematically higher than the buying price offered by those who didn't, even though it was exactly the same object.

Why it works

Losing something we already own is perceived as a loss, and losses hurt more than equivalent gains please us. That's why we ask for more to part with something than we'd pay to acquire it.

Source: 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.

In practice

A free trial or a period of use before buying makes the user start to feel the product as their own, and that sense of ownership, more than any additional argument, is usually what makes it hard to let go of afterward.

Related concepts

La ciencia de la persuasión
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