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Endowment effect

Endowment effect
In behavioral economics, the endowment effect (also known as divestiture aversion) is the hypothesis that people ascribe more value to things merely because they own them.[1] This is illustrated by the observation that people will tend to pay more to retain something they own than to obtain something owned by someone else—even when there is no cause for attachment, or even if the item was only obtained minutes ago. Examples[edit] One of the most famous examples of the endowment effect in the literature is from a study by Kahneman, Knetsch & Thaler (1990)[2] where participants were given a mug and then offered the chance to sell it or trade it for an equally priced alternative good (pens). Kahneman et al. (1990)[2] found that participants' willingness to accept compensation for the mug (once their ownership of the mug had been established) was approximately twice as high as their willingness to pay for it. Background[edit] Theoretical explanations[edit] Loss aversion[edit] Criticisms[edit] Related:  Loss Aversion

Cognitive bias Systematic pattern of deviation from norm or rationality in judgment A continually evolving list of cognitive biases has been identified over the last six decades of research on human judgment and decision-making in cognitive science, social psychology, and behavioral economics. The study of cognitive biases has practical implications for areas including clinical judgment, entrepreneurship, finance, and management.[9][10] Overview[edit] The notion of cognitive biases was introduced by Amos Tversky and Daniel Kahneman in 1972[11] and grew out of their experience of people's innumeracy, or inability to reason intuitively with the greater orders of magnitude. The "Linda Problem" illustrates the representativeness heuristic (Tversky & Kahneman, 1983[13]). Critics of Kahneman and Tversky, such as Gerd Gigerenzer, alternatively argued that heuristics should not lead us to conceive of human thinking as riddled with irrational cognitive biases. Definitions[edit] Types[edit] List of biases[edit]

What Is Loss Aversion? Source: By Tomwsulcer (Own work) [CC0], via Wikimedia Commons We don’t like to lose things that we own. We tend to become extremely attracted to objects in our possession, and feel anxious to give them up. Ironically, the more we have, the more vulnerable we are. Having accumulated wealth implies that we have more to lose than to gain. However, emotion regulation, such as taking a different perspective, can reduce loss aversion and help people overcome potentially disadvantageous decision biases. Why are we so afraid of losing? We are more upset about losing $10 than we are happy finding $10. The idea of loss aversion is shown in consumer behavior. The principle of loss aversion also applies to the emotional pain of scaling back. Ownership is not limited to material things, it also applies to ideas. Even our views of mate value change the more time we spend together. In a nutshell, the loss aversion is an important aspect of everyday economic life. What is the cure?

Jedi Mind Tricks: 17 Lesser Known Ways to Persuade People Want to know how to persuade people online and get what you want? The power of influence is usually all that separates the successful from everyone else. These are some tactics, discovered through psychological research, that you have probably not yet heard about, but have the potential to increase your persuasive abilities. I’m not going to cover reciprocity, scarcity or social proof and all those widely known persuasion principles. You already know all about those (in case you don’t, stop everything and read this book by Cialdini). Related: How Nike’s Making Persuasive Product Pages 1. The best way to persuade audiences that are not inclined to agree with you, is to talk fast. Want to boost persuasive power? Don Moore from Carnegie Mellon’s Center for Behavioral Decision Research has published research showing that confidence even trumps past accuracy in earning the trust of others. People naturally associate confidence with expertise. 2. Light swearing, that is. Image credit 3. 4. 5. 6.

New Orleans five years later FIVE YEARS AGO today, hell was unleashed on New Orleans. The storm surge created by the winds and rains of Hurricane Katrina overwhelmed the city's levee system, which the Army Corps of Engineers had poorly designed and poorly maintained. For days, with much of the city flooded, people pleaded for help from rooftops, the Superdome and the convention center. Scenes of depravation, desperation and death shocked the nation and the world. Of course, New Orleans wasn't the only site of devastation. Still, when Air Force One touches down Sunday, President Obama will alight on a New Orleans that is recovering -- from Hurricane Katrina, the recession and this year's oil spill in the Gulf of Mexico as well. People who fled are coming home. Potential improvements in the public education system are perhaps the most encouraging aspect of New Orleans's recovery. Many challenges remain. Coastal restoration is another challenge.

Dopamine Suppression and the Neuroscience of Giving Up A new study in mice suggests that dopamine-suppressing nociceptin neurons in the brain's reward-and-motivation center (called the ventral tegmental area) become very active just before a mouse reaches a breakpoint when it gives up on exerting effort to receive a sugary treat. According to the authors, nociceptin is "a complex molecule that suppresses dopamine, a chemical largely associated with motivation." This paper, "A Paranigral VTA Nociceptin Circuit That Constrains Motivation for Reward," was published July 25 in the journal Cell. article continues after advertisement Source: Pexels We all know the deflated feeling of realizing that a dream or goal you've been working toward is out of reach and unattainable. As an ultra-endurance athlete, I know from experience that the sudden urge to give up often seems to come out of nowhere. At first, one nose poke dispensed some sucrose, then it took two nose pokes, then five, and so on. Source: Max Huffman

Startup Therapy: Ten questions to ask yourself every month by In the last post I beat you to death about ditching your business plan but failed to provide an alternative. Okay okay, “Planning == Bad,” but the supposed benefits of planning are still important: designing for profitability, understanding your customers and competitors, focusing your attention, deciding what’s worth doing next, changing directions, and ensuring the founders agree on important issues. To help you, I’m stealing a trick from therapists. Cartoon by Andertoons Therapists don’t tell you what to do. You’re smart. That’s where this article comes in: To splash cold water on your face, forcing you to face reality and continue to defend or change the important choices inside your business. What follows is your startup therapy session. In one sentence, what does your product do and who buys it? Cartoon by AndertoonsThe first thing this does is force you to nail down your monthly expenses and accounts payable. What tips do you have? To help you, I’m stealing a trick from therapists.

Choosing a Methodological Path: Reflections on the Constructivist Turn | Grounded Theory Jenna P. Breckenridge, Queen Margaret University, Derek Jones, Northumbria University, Ian Elliott, Queen Margaret University, Margaret Nicol, Queen Margaret University Abstract Researchers deciding to use grounded theory are faced with complex decisions regarding which method or version of grounded theory to use: Classic, straussian, feminist or constructivist grounded theory. Introduction Reflecting on the PhD process, it could be said that the decision to use grounded theory is only a starting point. By sharing the methodological reasoning developed by the first author during her own PhD study, the aim of this article is to assist novice researchers in understanding the differences between two of the main grounded theory versions: constructivist grounded theory and classic grounded theory. Constructivist grounded theory The interpretive understanding of subjects’ meanings A central tenet of constructivist grounded theory is to give voice to participants. The co-construction of data

Why the Most Important Idea in Behavioral Decision-Making Is a Fallacy Loss aversion, the idea that losses are more psychologically impactful than gains, is widely considered the most important idea of behavioral decision-making and its sister field of behavioral economics. To illustrate the importance loss aversion is accorded, Daniel Kahneman, winner of the 2002 Nobel Prize in economics, wrote in his 2011 best-selling book, Thinking Fast and Slow, that “the concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics.” As another illustration, when Richard Thaler was awarded the 2017 Nobel Prize in economics, the phrase “loss aversion” appeared 24 times in the Nobel Committee’s description of his contributions to science. Why has such profound importance been attributed to loss aversion? Largely, it is because it is thought to reflect a fundamental truth about human beings—that we are more motivated by our fears than by our aspirations.

Constructing Grounded Theory: A Practical Guide Through Qualitative Analysis - Kathy Charmaz The Endowment Effect A strange thing happens in the mind when you buy something. No matter what it is—a pair of jeans, a car or even a house—in that moment when an object becomes your property, it undergoes a transformation. Because you chose it and you associate it with yourself, its value is immediately increased (Morewedge et al., 2009). If someone offers to buy it from you, the chances are you want to charge much more than they are prepared to pay. That is a cognitive bias called ‘the endowment effect’. It’s the reason that some people have lofts, garages and storage spaces full of junk with which they cannot bear to be parted. When tested experimentally the endowment effect can be surprisingly strong. The endowment effect is particularly strong for things that are very personal and easy to associate with the self, like a piece of jewellery from your partner. Sometimes, of course, the sentimental value of things is justified; but more often than not people hold on to old possessions for no good reason.

IIER 16: Moghaddam - coding issues in grounded theory Issues In Educational Research, Vol 16, 2006 [ Contents Vol 16 ] [ IIER Home ] Alireza Moghaddam The University of Western Ontario This paper discusses grounded theory as one of the qualitative research designs. It describes how grounded theory generates from data. Three phases of grounded theory - open coding, axial coding, and selective coding - are discussed, along with some of the issues which are the source of debate among grounded theorists, especially between its founders, Glaser and Strauss. Introduction Grounded theory refers to theory developed inductively from data. Grounded theory According to Strauss and Corbin (1990) a theory is a set of relationships that proposes a reasonable explanation of the phenomenon under study. Grounded theory was introduced by Glaser and Strauss in their 1967 book, The Discovery of Grounded Theory. Rationale of grounded theory The rationale of grounded theory studies is to investigate and recognise how complicated phenomena occur. Open coding

Sheridan Volume 10 , No. 1 , Art. 36 – January 2009 Linking the Intercultural and Grounded Theory: Methodological Issues in Migration Research Vera Sheridan & Katharina Storch Abstract : Connecting intercultural research with Grounded Theory was advocated in the early history of intercultural theorising and includes the development of researchers' intercultural competencies. Key words : cross-cultural adaptation; ethics; grounded theory; intercultural communication; migration; self-reflexivity Table of Contents 1. 2. 3. 4. 5. 6. 6.1 Reflecting on researching Polish migrant women (Katharina STORCH) 6.2 Reflecting on researching members of the "Vietnamese community" (Vera SHERIDAN) 7. Acknowledgements References Authors Citation The intersection between theoretical approaches and their applications in intercultural research are the focus of this paper. From her own research of migrant communities, Young Yun KIM (1989, p.103) writes: K: And are most of them women? T: Most of? T: Yes. K: Island. E: Z kim?

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