The endowment effect starts before the endowment

So reports Live Science:

A new study suggests that just fingering an item on a store shelf can create an attachment that makes you willing to pay more for it.

Previous studies have shown that many people begin to feel ownership of an item – that it “is theirs” – before they even buy it. But this study, conducted by researchers at Ohio State University, is the first to show “mine, mine, mine” feelings can begin in as little as 30 seconds after first touching an object.

In the name of scientific replication, the experimenters follow Richard Thaler’s classic design and used coffee mugs. They set up an auction in which a people could handle the mugs for varying lengths of time.

Participants in the study were shown an inexpensive coffee mug, and were allowed to hold it either for 10 seconds or 30 seconds. They were then allowed to bid for the mug in either a closed (where bids could not be seen) or open (where they could be seen) auction. The participants were told the retail value of the mug before bidding began ($3.95 in the closed auction; $4.95 in the open auction).

The study…found that on average, people who held the mug for longer bid more for it – $3.91 to $2.44 in the case of the open auction and $3.07 to $2.24 in the closed. In fact, people who held the mug for 30 seconds bid more than the retail price four out of seven times.

Behavioral economic theory aside, there are real practical lessons in here for auction choice architects and retailers of all stripes. Bottom line: Let people take the product home.

Full paper is here. Hat tip: Marginal Revolution

Tags: endowment effect