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  • Akul Chhillar

Why is my blue more blue than yours?

Consider this briefly. For what reason does the dealer of a house esteem the property more than the possible purchaser? Or on the other hand why does the vendor of a vehicle imagine a more exorbitant cost than the purchaser? In numerous exchanges for what reason does the proprietor accepts that his ownership is worth more cash than the potential proprietor will pay?

Jack Knetsch, Dick Thaler and Daniel Kahneman's research on the "endowment effect" says that when we own something we begin to value it more than other people do.

If we think about our lives, we would notice that our live revolves around conducting exchanges - what we give and what we get. We buy food,clothes,phone and sell stuff throughout as well such as car,furniture,homes etc.

Thus if transactions are one of the central themes of our lives, should not we as individuals be more adept at making the optimal decisions when it comes to selling our buying stuff.

Turns out, we as individual suck at it as much as we think we don't.

Dan Ariely, says ,in his book Predictably Irrational, there are 3 reasons why we humans are irrational when it comes to assessing our possessions.

  1. We are in love with what we own: Let say you own a Maruti Suzuki 800 which you plan to sell now. Even before you have made your decision to sell it, you would recall your trips in the car, how much you loved it when you first bought it, the first drive in the car and the list goes on.This would cause us to value our car more than the standard market re sell rate of the car.

  2. We focus on what we would lose rather than what we would gain: In the above case, you would focus more on giving up one of your most beloved possession for some amount of money. The loss of giving your memories will not be sufficient for the price that you will be getting in return. This is the reason we still have stuff in our house which we don't use but don't sell also. Because even before the sale has been made, we start to mourn the loss of it.

  3. Monkey see monkey do: We often time expect the other person to walk in our shoes and feel the same emotions for our possession as we do. We expect the buyer to appreciate our possession as much as we do. In our case, you would expect the buyer to appreciate the color of of the color while the buyer may see the dents on the car. You might expect him to acknowledge the legacy that you have however he might feel that your car is old and would require more maintenance and thus would not be willing to pay a lot.

The more time we spend with our belongings the more attached we feel to it.

Think about the last time you got yourself a DIY furniture from IKEA. The more time you spend building the furniture the more stronger you feel about owning it. The difficult the attempt to get things working the stronger is the ownership.

But does ownership takes place only when w truly own something? Well turns out, we can still fell attached or connected to our things even when we don't actually own it. There is something called "virtual ownership".

Let's say there is an online sale on Amazon, and you have placed a bet on one of the latest version of an I phone. Now, even though you don't own the phone, you still start to imagine owning it, how it would feel in your hands and brag about it front of your friends.

And now when you go back online to see the status of your bid, you see someone else has topped your bid. So what do you do now? You simply place another bid higher than the other person. You are ready to pay more price for a thing that you don't even own as of now. This might lead to winner's curse.

Another variant of this virtual ownership is "partial ownership". This is one of the most widespread technique used by marketers around the world. You see this around yourself so much that you don't even suspect how companies nudge us into paying more for something that may not need in first place.

You would have see various companies , both online and offline, providing us something called "trial version". The premise is to allow you to use their premium service for free for a few days. However, once you start using one of these services, it will be difficult for your to downgrade later on to other less costly services even though you may not need the premium service.

For example, let say Spotify offers you a free trail of their premium account for 30 days. We may feel that we will be using the account for just 30 days, but in reality what happening is that our perspective is being shifted and molded. You ,in reality, are becoming the owner of the account and the mere thought of losing the premium account later on will trigger emotional response in you.

But ownership is not only related to tangible things. It also applies to thoughts and ideas. And the more time we spend owning them, the difficult it becomes to change our perspective leaving us with unyielding dogma.

If you support a particular political party or a sports team for a substantial period of time, then chances are the you would continue to support them even though you know you may not like them anymore because the loss of giving up supporting your team or political party may be more than what you will get in return when you start to follow back a new team of a political party.

Ownership is one of the essential threads of life and thus cannot be avoided. However, you can be mindful of your ownership because it will be difficult to give up your ownership be it be in terms of ideas, thought or tangible goods.

Should you really go for that gold membership program ,because it will be not as easy to downgrade later on, is what you have to decide for yourself.

See you in my next post, till then Tschüss.

This blog has been inspired from the ideas present in the book Predictably Irrational by Dan Ariely.

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