The mug experiment
In a 1990 study, students randomly given a coffee mug asked a median of about $7 to sell it, while students without one would pay only around $3. Same mug—but owning it more than doubled its value. Standard economics says the buying and selling prices should be about the same.
Why it happens
The main explanation is loss aversion: giving up something feels like a loss, and losses loom larger than equal gains. Companies use free trials and generous return policies to make you feel ownership first. Garage-sale sellers overpricing their stuff is the same bias, and it feeds status quo bias.
FAQ
- Does everyone show the endowment effect?
- Most people do, but experienced traders show it much less.
- Is it linked to impulse buying?
- Yes—try-ons and free trials create a sense of ownership that nudges you to buy.
Sources reviewed: 2026-10-26
References
- Thaler, R. (1980). Toward a positive theory of consumer choice. Journal of Economic Behavior & Organization, 1(1), 39–60.
- 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.