= 27d567bc2d48d9f40e9ccc20ea370b15)
Viliam_Bur comments on [Link] Is the Endowment Effect Real? - Less Wrong
You are viewing a comment permalink. View the original post to see all comments and the full post content.
= 783df68a0f980790206b9ea87794c5b6)
Loading…= b715d02e85f7b3b4ae65ca3d3e450868)
Subscribe to RSS Feed
Powered by Reddit
= f037147d6e6c911a85753b9abdedda8d)
You are viewing a comment permalink. View the original post to see all comments and the full post content.
Comments (17)
Buying an item and selling an item are not symetrical situations. Unless you buy and sell the item repeatedly.
For example, I buy a new device, and I spend 10 hours studying how to use it. Later I sell the device. Do I get those 10 hours of my time back? No. So the total outcome of buying the device and selling the device was minus 10 hours worth of my time.
With simpler items, the transaction cost may be smaller, but it always exists. When I buy an item, I must change my life to include the effective use of the item. When I sell an item, I must change my life again to avoid needing the item. Even if you sell me a candy, I must think about whether I want that candy. If you sell me a mug, I have to check whether it does not have defects. If you sell me a lottery ticket, I will calculate the chances and compare with other products in the same category (even if I am irrational enough to buy a lottery ticket, I will still do my flawed calculations, and they will cost me real time).
Also, in my experience, I buy stuff all the time, but I rarely sell anything. If someone asked to buy my toaster, I would decline. I know it works. If I replaced it with the proceeds of the sale, I might get a lemon.
I think it's plausible that this is a major component, possibly even the entirety, of the basis of the endowment effect. Selling one's possessions is, in general, an unusual activity which requires a break in routine, possibly stepping outside one's comfort zone, and usually requires more effort than buying something. The differences between WTP and WTA may be due at least to some degree to the different levels of inconvenience between the processes.