The Endowment Effect: Why You Overvalue What’s Already Yours

It’s a Saturday afternoon and two friends, both low on cash, have scored free tickets to a big basketball playoff. One sells his tickets for several hundred dollars, relieved to have paid his rent. The other feels the tickets are 'too special' to sell, seeing the chance to go as a windfall not to be traded, even though he’d never have purchased the tickets at market value. To his friend, this looks irrational, almost comical. Yet, when asked to buy a similar ticket at full price, he scoffs at the expense. This peculiar asymmetry between what we’re willing to sell and what we’d pay to buy is everywhere: in garages full of unused collectibles, closets stuffed with never-worn 'bargain' clothes, or even that bottle of wine you’d never pay retail for but will happily drink.

Economists call this odd quirk the endowment effect—our tendency to assign more value to items simply because we own them. It’s not always logical, but it’s deeply human: giving something up feels like a bigger loss than gaining it ever felt as a win. Whether dealing with sentimental trinkets or high-stakes investments, our brains react emotionally to the prospect of losing what’s become 'ours.'

Research shows that this effect can make us hold on to possessions we neither need nor truly want, preventing us from seizing better opportunities. It can also warp our sense of what’s 'fair' in negotiations, since both sides often overvalue their own stake. For anyone seeking to make more rational trade-offs, confronting the endowment effect is an essential step toward clearer, less emotionally tangled choices.

Next time you’re faced with the decision to keep, sell, or upgrade something you own, take a moment to ask yourself if you’d pay market price to buy it back. If not, acknowledge that you might be falling for the endowment effect. Then, list a few things you could do with the money or resources you'd gain by letting go. Don’t just accept inertia: consciously challenge your attachment, and imagine how someone outside your situation—without your history—would decide. You may find yourself ready to move on, lighten up, and seize opportunities you’d otherwise overlook.