Concept · Cognitive Bias: Economic and consumer biases
Endowment effect
Origin: Thaler, 1980; Kahneman, Knetsch & Thaler, 1990
The Biological Bridge
This business construct is human-invented, but the outcome it's trying to achieve has deep biological roots.
Surface Construct
Valuing owned items more than identical unowned items
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Underlying Outcome
Resist dispossession to maintain survival-critical resources
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Biological Mechanism
Territory/possession defense. The calories an animal already has (in territory, cache, or body fat) are guaranteed survival resources. Potential calories require risky acquisition. Endowment effect reflects the genuine asymmetry: what you have is certain; what you might get is probabilistic.
Key Insight: Endowment effect is rational when transaction costs are high and possession is genuinely more valuable than potential acquisition.
The Full Picture
Animals value food they possess more highly than identical food they must acquire—a bird will defend a food cache against larger competitors but won't fight the same competitor for unclaimed food. Possession changes valuation. This asymmetry evolved because defending existing resources is cheaper than acquiring contested ones. The endowment effect isn't irrational attachment—it's metabolically rational risk asymmetry. Losing hurts more than gaining helps because calories in hand prevent starvation.