Why Owning It Makes It Worth More

Why We Come Back · 12 October 2026

Give someone a mug and they will ask about twice what others will pay for it. A 2005 challenge showed the gap can vanish, and the evidence since shows when owning really does raise the price.

Key takeaways

In Kahneman, Knetsch and Thaler's 1990 experiments, students given a mug put its median value at $7.12, against $3.12 for students choosing between the mug and cash.
In 2005 Charles Plott and Kathryn Zeiler found no gap between selling and buying prices for mugs once participants were trained and anonymous.
In 2011 Isoni, Loomes and Sugden found the mug gap absent but a significant, persistent gap for lotteries under similar procedures.
At sports card shows in 2003, 6.8 per cent of inexperienced non-dealers swapped the item they were given, against 46.7 per cent of frequent traders.
In Peck and Shu's 2009 study, touching a Slinky or a mug raised buyers' average valuation from $2.73 to $3.38.

The strongest case against the most famous coffee mug in economics was made in 2005. Charles Plott and Kathryn Zeiler repeated the classic experiment, in which people given a mug ask far more to sell it than others will pay to buy one, but first trained their participants in how the valuation procedure worked, gave them paid practice and kept every answer anonymous. Under those conditions the gap between selling and buying prices disappeared. If owning a mug really made it worth more, they reasoned, the effect should survive people understanding the rules. That objection comes first, because everything else has to be read in its light.

The mugs that started it

The original result came from Daniel Kahneman, Jack Knetsch and Richard Thaler, published in the Journal of Political Economy in 1990. In their first experiment, 44 students in a law and economics class at Cornell University were given coffee mugs on alternate seats, mugs that sold for $6 at the campus bookstore. Markets were then run between owners and non-owners. Because the mugs had been handed out at random, about half should have changed hands. Far fewer did. Across the mug and pen markets, median selling prices were more than twice median buying prices.

Earlier rounds with tokens worth a fixed cash sum had produced the volume of trade theory predicts, so the cost or awkwardness of trading could not explain the shortfall. Something about owning the mug had changed what it was worth.

A later experiment dealt with the objection that owners were simply richer by one mug. At Simon Fraser University, 77 students were split into sellers given a mug, buyers without one, and choosers who could take either the mug or cash at each price. Choosers stood exactly where sellers stood, except that the mug was not yet theirs. Sellers put the median value at $7.12, choosers at $3.12 and buyers at $2.87.

Knetsch had shown the same pattern a year earlier without any money changing hands. In his 1989 study in the American Economic Review, one class was given mugs and offered chocolate in exchange, a second was given chocolate and offered mugs, and a third simply chose. As the 1990 paper reports it, 89 per cent of the mug class kept the mug, 56 per cent of the choosing class picked one, and only 10 per cent of the chocolate class swapped for a mug.

What the book makes of it

Kahneman gives the mugs a chapter of their own in Thinking, Fast and Slow (2011), chapter 27, "The Endowment Effect", pages 289 to 299. The term was Thaler's, and the book glosses it plainly: "Owning the good appeared to increase its value." Kahneman's reading is that the effect is loss aversion working in a choice with no risk attached. Giving up the mug registers as a loss and getting one as a gain, and losses weigh more. On page 296 he notes that the sellers' valuation was a bit more than twice that of choosers and buyers, a ratio he describes as very close to the loss aversion coefficient found in risky choice.

He also draws the boundary carefully. Shoes in a shop, and the money a customer hands over for them, are held "for exchange", and the book states that "There is no loss aversion on either side of routine commercial exchanges" (page 294). Wine and Super Bowl tickets are held "for use", to be consumed or enjoyed, and that is where owning starts to bend the price. The chapter's best-known example is a wine-collecting professor who would not sell a bottle for $100 and would not pay more than $35 for one of the same quality (pages 292 to 293).

The chapter states its limits as limits. On page 297 Kahneman writes that "reference points are labile, especially in unusual laboratory situations", and that the effect can be removed by changing them. Experienced traders show little of it, and so do people who never physically held the good before trading was mentioned (pages 297 to 298). He refers to "the ongoing debate about the endowment effect" and ends the chapter: "Much remains to be learned about the endowment effect."

An argument about the procedure

Plott and Zeiler's 2005 paper argued that reported gaps between buying and selling prices could come from participants misunderstanding how they were being asked to value things. Their answer was to combine every safeguard used anywhere in the literature: anonymity, a method that rewards stating your true value, and extensive training. With mugs and those controls, the gap was gone. In a 2007 paper they reported the same for direct swaps between goods, where the asymmetry vanished under their modified procedures and returned when the traditional ones were restored.

Andrea Isoni, Graham Loomes and Robert Sugden replied in the same journal in 2011. Using similar procedures, they also found no gap for mugs. But data from the original study, which had not appeared in the 2005 paper, showed a significant and persistent gap for lotteries under the same procedures, and their own new experiments confirmed both results. They concluded that whether the gap appears is a more complex question than had been supposed.

Plott and Zeiler answered in the same issue. In their reading, all the mug data reject the theory that owning creates a loss-averse gap, and the lottery gaps reflect unstable attitudes towards uncertainty, together with beliefs about the lottery that shift depending on whether a person is buying or selling.

The mug gap can be switched off by procedure, and a lottery gap survives the same procedure. We read the procedural results as a limit on how large and how general the effect is, and we stop short of treating them as proof that it is absent, because ownership leaves traces in studies that never ask anyone to name a price.

The mug gap can be switched off by procedure, and a lottery gap survives the same procedure.

Experience, ownership and touch

John List's 2003 study in the Quarterly Journal of Economics took the question to sports card shows. Visitors were given one of two pieces of memorabilia chosen to be of similar value, and offered the chance to swap. Among non-dealers who traded fewer than six times a month, only 3 of 44 swapped, 6.8 per cent. Among those who traded six or more times a month, 14 of 30 did, 46.7 per cent, close to the half that standard theory predicts. Dealers behaved like the experienced group. When List returned to the same people a year later, those whose trading had increased were much more likely to swap, which points to experience doing the work.

Carey Morewedge and colleagues asked in 2009 whether ownership or loss aversion was driving the effect. Earlier studies could not tell them apart, because sellers were almost always owners. In two experiments reported in the Journal of Experimental Social Psychology, the effect appeared wherever ownership was present, even with no loss in prospect, and disappeared when buyers and sellers were in the same position as owners.

The feeling of owning can begin before a purchase. In 2009 Joann Peck and Suzanne Shu reported in the Journal of Consumer Research that merely touching an object increased the sense that it was yours. In their first study, 231 University of Wisconsin students who did not own a Slinky or a mug valued them at $3.38 on average when they could touch them, against $2.73 when they could not. Without touch, imagining owning the objects raised that figure to $3.59. The paper opens with a 2003 warning from the Illinois attorney general about retailers who encourage holiday shoppers to hold items and imagine owning them.

Where it reaches your wallet

In 2001 Stacy Wood argued in the Journal of Marketing Research that buying at a distance splits a purchase into two decisions, ordering and then keeping or returning, and that the endowment effect gives a lenient return policy some surprising benefits for the seller. Across three experiments she found support for the idea that ownership depends more on perception than on possession.

A 2016 meta-analysis of 21 papers by Narayan Janakiraman and colleagues in the Journal of Retailing found that lenient return policies increased purchases, and increased returns by a smaller amount. According to the University of Texas at Dallas summary of the work, longer return windows reduced return rates, a pattern the summary connects to the endowment effect.

Free trials, home try-ons and long return windows all put an object in your hands before the money is final. None of the studies above tested a subscription trial directly, so the checks below are inferences from them:

Write down what the item is worth to you before you touch it, since in Peck and Shu's study handling alone lifted buyers' valuations from $2.73 to $3.38.
Value it as a chooser would, asking what you would take in cash instead of it, because the Simon Fraser choosers put the mug at less than half the sellers' price.
Set the return or cancellation reminder on the day the item arrives, before the feeling of owning it has settled in.
Notice your own experience: List's frequent traders showed little of the effect, and people who return things often may show less of it too.

Owning something makes it feel worth more for many people much of the time, and the feeling can start with a touch or a delivery box. The size of the gap depends on how the question is asked and on how practised the owner is. The neat 2 to 1 ratio that ties it to loss aversion is less secure than the ownership account. Plott and Zeiler's work remains the hardest evidence to absorb, since a trained and anonymous participant valuing a mug shows no gap at all. Shoppers, though, are rarely trained in anything of the kind before they open a parcel.

So the test, when a return window is about to close or a free trial is about to roll into a payment, is a single question: if this were still on the shop shelf at the price I paid, would I walk over and buy it again today, knowing everything I now know about how often I have actually used it?

Common questions

What is the endowment effect?

It is the tendency to value something more once you own it. In one of Kahneman, Knetsch and Thaler's 1990 experiments, run at Simon Fraser University, students given a mug set a median selling price of $7.12, while students choosing between the same mug and cash valued it at $3.12.

Is the endowment effect real?

It appears in many studies, and its size depends on procedure. In 2005 Charles Plott and Kathryn Zeiler found no gap for mugs when participants were trained and anonymous. In 2011 Andrea Isoni, Graham Loomes and Robert Sugden found a persistent gap for lotteries under similar procedures, and no gap for mugs.

Does trading experience reduce the endowment effect?

In John List's 2003 study at sports card shows, only 6.8 per cent of inexperienced non-dealers swapped the item they were given, against 46.7 per cent of those who traded six or more times a month.

Is the endowment effect caused by loss aversion or by ownership?

Carey Morewedge and colleagues argued in 2009 that owning, more than fear of losing, drives it. In their two experiments the effect appeared whenever ownership was present, even without a loss in prospect, and disappeared when buyers already owned the item and sellers did not.

Sources

Plott, C. R., & Zeiler, K. (2005). “The willingness to pay-willingness to accept gap, the ‘endowment effect,’ subject misconceptions, and experimental procedures for eliciting valuations.” American Economic Review, 95(3), 530-545. doi:10.1257/0002828054201387. Abstract read: controls for subject misconceptions combined (anonymity, incentive-compatible elicitation, practice and training, modified Becker-DeGroot-Marschak mechanism); experiments with lotteries and mugs; with modified procedures, no gap between WTA and WTP observed.

Plott, C. R., & Zeiler, K. (2007). “Exchange asymmetries incorrectly interpreted as evidence of endowment effect theory and prospect theory?” American Economic Review, 97(4), 1449-1466. doi:10.1257/aer.97.4.1449. Abstract read: no exchange asymmetries under modified procedures; asymmetries reappear with traditional-type procedures.

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. doi:10.1086/261737. Full text read: experiment 1, 44 students in a Cornell law and economics class, mugs sold for $6.00 at the bookstore, induced-value token markets traded as predicted; median selling prices in mug and pen markets more than twice median buying prices; experiment 6, 77 Simon Fraser students, median valuations sellers $7.12, choosers $3.12, buyers $2.87; section VI reports Knetsch (1989): 89 per cent of the mug-endowed class (N = 76) kept mugs, 56 per cent of the choice class (N = 55) chose mugs, 10 per cent of the chocolate-endowed class (N = 87) chose mugs.

Knetsch, J. L. (1989). “The endowment effect and evidence of nonreversible indifference curves.” American Economic Review, 79(5), 1277-1284. Abstract read: none published (RePEc lists no abstract) and the JSTOR full text was not accessible; the results used are as reported in the full texts of Kahneman, Knetsch and Thaler (1990), section VI, and List (2003), section I.

Isoni, A., Loomes, G., & Sugden, R. (2011). “The willingness to pay-willingness to accept gap, the ‘endowment effect,’ subject misconceptions, and experimental procedures for eliciting valuations: comment.” American Economic Review, 101(2), 991-1011. doi:10.1257/aer.101.2.991. Abstract read: no WTP-WTA disparity for mugs under Plott and Zeiler's procedures; unpublished data from the same study show a significant and persistent disparity for lotteries; new data confirm both results.

Plott, C. R., & Zeiler, K. (2011). “The willingness to pay-willingness to accept gap, the ‘endowment effect,’ subject misconceptions, and experimental procedures for eliciting valuations: reply.” American Economic Review, 101(2), 1012-1028. doi:10.1257/aer.101.2.1012. Abstract read: all mug data reject endowment effect theory; lottery gaps associated with unstable attitudes toward uncertainty; lottery outcome beliefs influenced by whether WTP or WTA is reported.

List, J. A. (2003). “Does market experience eliminate market anomalies?” Quarterly Journal of Economics, 118(1), 41-71. doi:10.1162/00335530360535144. Full text read: sportscard show, 148 subjects (74 dealers, 74 non-dealers), two memorabilia items of similar value; dealers traded at 43.6 and 45.7 per cent; inexperienced non-dealers (fewer than 6 trades a month) 3 of 44 (6.8 per cent), experienced non-dealers 14 of 30 (46.7 per cent); 53 subjects in a follow-up a year later, of those who increased trading 13 of 21 (62 per cent) traded.

Morewedge, C. K., Shu, L. L., Gilbert, D. T., & Wilson, T. D. (2009). “Bad riddance or good rubbish? Ownership and not loss aversion causes the endowment effect.” Journal of Experimental Social Psychology, 45(4), 947-951. doi:10.1016/j.jesp.2009.05.014. Abstract read (London Business School publication page): two experiments separating ownership from loss aversion; the effect appeared when ownership was present without loss, and disappeared when buyers were owners and sellers were not.

Peck, J., & Shu, S. B. (2009). “The effect of mere touch on perceived ownership.” Journal of Consumer Research, 36(3), 434-447. doi:10.1086/598614. Full text read: study 1, 231 University of Wisconsin-Madison undergraduates, all buyers, Slinky and mug; valuation $3.38 touch against $2.73 no touch (no imagery); without touch, imagery raised valuation from $2.73 to $3.59; opens with a 2003 Illinois attorney general warning to holiday shoppers.

Wood, S. L. (2001). “Remote purchase environments: the influence of return policy leniency on two-stage decision processes.” Journal of Marketing Research, 38(2), 157-169. doi:10.1509/jmkr.38.2.157.18847. Abstract read: remote purchase framed as order then keep-or-return decisions; the endowment effect suggests benefits of return policy leniency to the retailer; three experiments support the idea that product ownership depends more on perception than possession.

Janakiraman, N., Syrdal, H. A., & Freling, R. (2016). “The effect of return policy leniency on consumer purchase and return decisions: a meta-analytic review.” Journal of Retailing, 92(2), 226-235. doi:10.1016/j.jretai.2015.11.002. Abstract read: not accessible; read the University of Texas at Dallas news summary, which reports 21 papers, leniency increasing purchases, a smaller but significant increase in returns, and leniency in time reducing return rates, with the endowment effect offered as a possible explanation.

Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux (first paperback edition 2013). Read in full by this publication, with a reliability audit. Ch. 27, The Endowment Effect, pp. 289 to 299: Thaler's term and 'Owning the good appeared to increase its value' (pp. 292 to 293); the wine-collecting professor, $100 and $35 (pp. 292 to 293); goods held for exchange and for use (p. 294); the ratio of about 2 to 1 close to the loss aversion coefficient (p. 296); reference points labile (p. 297); List and Knetsch eliminators (pp. 297 to 298); 'Much remains to be learned about the endowment effect' (p. 299).