People regularly succumb to a sense of ownership, because «mine» is a very strong attitude. As soon as we take possession of the subject, its significance increases. That is why we so often see unrealistic prices on sales and buy into marketing tricks. Here are six effects that ownership has on us.
Everyone who has ever tried to sell a house or a car finds that sellers and buyers rarely agree on the price. Just look through the classifieds section of your local newspaper and you’ll find examples of people overcharging ordinary items. It’s not that the seller is not himself.
Of course, sellers want to get as much money as possible, but at the same time they allow the opportunity to bargain. Is that why people sometimes charge exorbitant prices, or is there another reason?
The price difference between buyers and sellers was enormous
The behavior of the buyer has its own characteristics. We grab special offers like: «In 30 days we will refund your money.» Isn’t it a joy to own a new digital camera when you know you can return it? Although most of the time it stays with us. On auction sites like EBay, we set a bidding limit for ourselves, but we break it after a minute because someone outbid.
Behavioral economists argue that ownership—whether real, partial, or virtual—has a strange effect. Let’s see how strongly these oddities manifest themselves under controlled conditions.
Buyers and sellers are separated by an abyss
Getting tickets to Duke’s Basketball Tournament of the Year is like pulling a star out of the sky. They have to be played in the lottery, because many people are fighting for the right to own. After the lottery in the hands of the lucky ones is the item that everyone wanted. This random distribution is a great opportunity to study the psychology of buying and selling.
In 2000, Ziv Carmon and Dan Ariely set up an experiment. First, they divided the students into two groups: those who won tickets, and those who were left with nothing, but passionately wanted to get to the match. Then they began to call the participants of the experiment to find out how much the happy owners are willing to sell tickets for, and what price those who are unlucky are willing to pay.
The difference in price between buyers and sellers was enormous. Those who wanted to get to the decisive basketball game were willing to pay an average of $166 for a ticket. Which sounds like a good thing, given the opportunities for students and the fact that this is a price for just a couple of hours of entertainment.
However, it turned out that the price of buyers was not even close to the expectations of sellers. Ticket holders named a completely wild amount: an average of $2,411! Do you think they really wanted to find fools who would pay it? Of course, among those who passionately wanted to visit the game, there was not a single interested buyer.
Six complexes of the owner
In Predictable Irrationality, Dan Ariely argues that possessiveness has six strange effects.
1. Ownership enhances the sensory perception of value
As soon as we take possession of something, we begin to become attached to it. The fact of owning an object already increases its value in our eyes: we develop a relationship with each thing.
2. We tend to focus on losses.
When selling, we seem to lose sight of the financial side and instead focus on the subject that is about to get out of hand, writes Dan Ariely. Not wanting to feel bad makes you ask an exorbitant price for an old house, a car, or a collection of rare records.
Do potential buyers understand how hard it is for us to part with these worn, dusty vinyl discs. Nothing like that, they would rather pay attention to their dubious appearance or laugh at their poor musical taste.
4. Effort sharpens the perception of value.
A table once bought, assembled with one’s own hand after torment, seems more expensive than the same table, bought ready-made. When we invest effort, we give the item a part of ourselves, so its value increases. Other people don’t care and shouldn’t.
5. Virtual Property
People manage to feel like they own something before they actually own it. Dan Ariely says prices on auction sites often skyrocket due to a sense of perceived ownership. It is worth making the first bet, and we already see this thing in our hands. When someone outbids, we immediately raise the threshold, because since we mentally took possession of this lot, it has acquired exceptional value.
6. Partial ownership
Marketing aces know the power of ownership and use tricks to spin the buyer into partial ownership, which is almost certain to become full ownership. Few people take furniture to the store after the 30-day money-back guarantee period, because we are attached to it, it is ours.
Let’s be objective
It turns out that we are asking a fabulous price for the property not out of greed. The attitude towards different junk really changes a lot as soon as it becomes ours. Unfortunately, addictions lead to negative consequences. By setting an unthinkable price on the things we are trying to sell, we are not selling anything at all. On the contrary, when we buy, we are drawn into virtual and partial ownership, although we do not particularly need these things.
It would seem that the problems are solved simply: try to objectively evaluate the property and consider each purchase. Talking is always easier than doing. It’s hard to remain impartial when you’re selling what you value, and it’s easy to create an imaginary relationship with what you want.
Theoretically, the recipe «How to overcome the complexes of the owner» is objectivity and impartiality. Is such an enlightened attitude to property possible? What do you think?
Source: www.spring.org.uk