Laws of Behaviour

Mental models for product design

015Effect

Endowment Effect

People overvalue things that they own.

Why it matters

People will overvalue something that they own (or perceive to own, even if it's just having access to a product), regardless of market value.

i.e., once they've test driven the car, and synced their phone to the bluetooth, they'll want it more .

There are plenty of studies affirming the irrationality of ownership, but my favourite are those on Capuchin monkeys—which shows how broad the research is on this.

Through a series of experiments with bartering, it was demonstrated that Monkeys and Chimpanzees will value identical tokens differently, depending on which they own.

Churn:

• If people feel like they own something, or have invested into personalising an experience, they're typically less likely to churn. • On the other hand, if the process of personalising (i.e., creating) an account is too time consuming, they may churn sooner .

What to inspect

  • Check whether the experience reflects this: If people feel like they own something, or have invested into personalising an experience, they're typically less likely to churn.
  • Check whether the experience reflects this: On the other hand, if the process of personalising (i.e., creating) an account is too time consuming, they may churn sooner .
  • Map each visible element to how it supports or undermines: People overvalue things that they own.
  • Walk the primary task once with time pressure; note where attention drops.
  • Ask a colleague unfamiliar with the product to paraphrase the screen in one sentence.

Common anti-patterns

  • Assuming users consciously notice every place where "People overvalue things that they own" could apply.
  • Dense copy and parallel actions that increase mental effort unrelated to the user’s goal.
  • Ignoring downstream effects on churn when shipping this pattern.

Critique prompts

  • If people feel like they own something, or have invested into personalising an experience, they're typically less likely to churn.
  • On the other hand, if the process of personalising (i.e., creating) an account is too time consuming, they may churn sooner .
  • Where on this screen would "Endowment Effect" show up as friction or misunderstanding?
  • What would a first-time user misunderstand here in under five seconds?

Related laws