The Endowment Effect

Yes, but it is smaller and more conditional than the classic studies suggest. Students given a mug asked about 7 dollars to sell it while buyers offered about 3, and lottery winners valued basketball tickets more than ten times as highly as losers. The effect shrinks with trading experience and careful procedures, and loss aversion does not fully explain it.

What the report found

1. The classic gap is large. In the best known experiments, students given a mug asked a median of about 7 dollars to sell it, while students who could buy one offered about 3. Given a mug or a chocolate bar, nine in ten kept the mug or the chocolate they started with.
2. It appears with real stakes. Duke University students who won a lottery for basketball tickets asked about 2,400 dollars to sell; those who lost offered under 200 to buy.
3. Experience shrinks it. Among sports card collectors who rarely traded, 7 per cent swapped a good they had been given; among frequent traders, 47 per cent did.
4. Researchers still argue about the cause. One group made the gap disappear with careful training in how prices were asked; another found it persisted under the same procedures. Loss aversion, the original explanation, has weakened more than the effect itself.
5. The effect is real but conditional. It is strongest for goods held for use, among people new to trading, and where people feel the thing is theirs. It is weak or absent for money and goods held for resale.

What is inside

1. The idea and where it came from
2. The original studies, explained
3. What happened when others tested it
4. Where researchers disagree
5. What we can say with confidence

Plus a timeline of four decades of research, a summary of the original studies and a graded list of claims.

Who it is for

For pricing teams, marketers, product managers, policymakers and anyone who has sold something they own.

How we work

Evidence Reviews follow one well known idea from its origin to today. Every claim is graded Established, Emerging or Untested. Where researchers disagree, as they do sharply on whether the endowment effect is a product of the experiment, both sides are set out before we say where we stand.

Cite this report

The Why We Project (2026) The Endowment Effect: Why we overvalue what we own. Evidence Review No. 12. Dubai: Why We Tech Ltd. Available at: thewhyweproject.com