Endowment Effect
The endowment effect is valuing something more once you own it — demanding more to give it up than you would have paid to get it.
Full definition of Endowment Effect →:: COMPARE ::
Endowment effectvsLoss aversion
The short answer
The endowment effect is loss aversion pointed at ownership. Handing over the mug is coded as a loss; buying it is coded merely as a gain. Since losses weigh more, the two prices rarely meet — one bias is the general principle, the other its most demonstrable instance.
Side by side
| Aspect | Endowment effect | Loss aversion |
|---|---|---|
| Scope | Owned things | Everything |
| Shows as | A price gap | An asymmetry |
| Named | 1980 | 1979 |
| Relationship | An instance | The principle |
What each one means
Loss Aversion
Loss aversion is the principle that losing something hurts more than gaining the same thing feels good — so we fight harder to avoid losses than to win equivalent gains.
Full definition of Loss Aversion →