#lossaversion

The Reason You Can't Let Go (And What It's Quietly Costing You)

Here's an experiment that should make you slightly uncomfortable.

A psychologist at Cornell gave half his students a coffee mug. Standard university mug. Nothing special. He then asked the students who had the mug how much they'd want to sell it for. He asked the students who didn't have a mug how much they'd be willing to pay for one.

Same mug. Same room. Same day.

The sellers wanted an average of $7.12. The buyers offered $3.12.

Nobody had manufactured any attachment to this mug. Some students had owned it for about fifteen minutes. But the act of possession had already altered their sense of its value. Giving it up had become a loss. And as we established last time, losses loom roughly twice as large as equivalent gains.

This is the endowment effect.

And once you understand it, a huge amount of baffling human behaviour starts to make sense.

Why do people hold onto clothes they haven't worn in two years? Because throwing them away is a loss.

Why do investors keep holding shares long after any rational case for doing so has disappeared?

Because selling crystallises the loss, makes it real, and an unrealised loss still has a ghost of hope attached to it.

But here's where it gets genuinely strange.

The endowment effect doesn't only apply to physical objects.

It applies to ideas.

Once you've held a belief long enough, once you've built even a small part of your identity around it, abandoning that belief becomes a loss.

The person who has been politically convinced of something for twenty years isn't neutrally evaluating new evidence, they're protecting something they own.

The entrepreneur who has been building the same type of business for a decade isn't fully open to a completely different model. Not because they lack intelligence. Because what they have has become theirs. And losing what's yours hurts.

This is why genuinely changing your mind is one of the hardest things a human being can do. It isn't stubbornness in the crude sense. It's loss aversion applied to your own worldview.

There's a version of this that operates in business that most people completely miss.

Researchers presented two identical scenarios to a group of people:

A car dealer raises the price of a model by £200 above the standard list price due to a shortage. 71% of people view this as unfair.

A different dealer who had been selling at £200 below list returns to the standard price. 58% find this acceptable.

The financial outcome is identical. The car costs the same in both situations.

But the emotional reaction is completely different, because in the first scenario, the £200 feels like money being taken from the buyer's pocket. In the second, it feels like the removal of a gift.

The mug. The belief. The surcharge. The same mechanism runs through all of it: we feel the removal of something we have far more acutely than we feel the absence of something we never had.

The practical implication of all this cuts both ways.

If you're influencing someone else — in sales, in leadership, in any relationship — the most powerful question you can help them answer is not "what could you gain?" It's "what are you already losing?" Not in a manipulative way. In an honest one. If your product, your advice, or your recommendation genuinely solves a real problem, then the cost of inaction is real. Naming it is a service, not a trick.

This is also why free trials convert better than discounts. Once someone has experienced ownership — even briefly — the prospect of losing access to something feels more urgent than the appeal of gaining it in the first place. The trial creates an endowment. The discount doesn't.

But the more uncomfortable application is the one that faces inward.

The things you're not changing in your own life, the habit you haven't broken, the conversation you keep avoiding, the version of yourself you keep defending, ask yourself honestly: is that resistance based on genuine reasoning?

Or is it the endowment effect? Have you simply owned that pattern long enough that giving it up feels like a loss, even when keeping it is costing you something real?

Loss aversion doesn't care whether what you're protecting is worth protecting. It just makes giving things up feel harder than it is.

The first step is noticing when that mechanism is running the show.

The full psychology behind this, including how to apply it in your own decision-making and communication, is in the free Persuasion Psychology guide. Link in bio.

Till next time,

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ALLOW DINERS TO ADD MEAT TO A PLANT-RICH DISH FOR A SURCHARGE

Presenting diners with a menu that is plant-rich but allows them to add meat for a surcharge is likely to influence dish choices given the tendency to favor the “default” choice over alternatives (Campbell- Arvai et al. 2012). This effect, known as “status quo bias,” is thought to occur because diners either do not realize when different options are available or are not willing to make the effort to seek out alter-natives. Another good reason to offer meat at an additional surcharge is that this approach can make the additional cost of this ingredient more obvious to diners. This taps into a phenomenon commonly discussed in relation to human decision-making; that is, loss aversion: people find it painful to spend money unnecessarily, a discomfort often greater than the anticipated pleasure of adding meat to their meal (Radnitz et al. 2018).

Game: Animal Crossing: Pocket Camp

 Fixed Interval Reinforcement Schedule:

The fruit trees in the game allow the player to harvest fruit every three hours. The desired action is that the player will return every 3 hours to harvest their digital fruit. As the player gets closer in time to being able to collect their fruit their anticipatory pleasure will build until they are able to consummate by again harvesting the fruit. However, just after harvesting they experience the downswing in pleasure from the dopamine boost of their fruit collection and want the feeling again right now. The entire time that the trees are re-growing fruit there is an icon above them which the player can click to speed up the process. This is a desired action on the part of the player to get them to spend money to speed up the process and the dopamine delivery.

Variable Interval Reinforcement Schedule:

The player is often passing the small section of seafront that houses the fishing mechanic. At any time, a fish’s shadow may appear which should trigger the player to attempt to catch the fish. Should they succeed they are rewarded with one of many in-game fish which can be used in quests or simply to sell. They are also given a moment of victory in which their character holds up the fish to present to the player their success. The acquired item along with the moment of victory become one reward with variable elements that the player can get the opportunity to receive at any time as long as their character is near a body of water. This means their reinforcement pause remains at zero as long as the player stays interested in receiving this reward because it could come at any time.

Fixed Ratio Reinforcement Schedule:

This schedule is triggered by the player being given quests, usually to complete requests for NPCs or collect coconuts or fish. An activity that the player can, and ideally will, set about doing immediately. If the player completes all their quests for the day then they have a maximum 24hour reinforcement pause that would almost certainly cause them to stop playing that day. If, however, they have other quests to complete, then after they have turned in their completed quest (after some manufactured anticipation of needing to turn it in) they are met with a screen compiled of all their incomplete quests, showing them how close they are to finishing them. If these quests successfully trigger the hook cycle again then this renders the reinforcement pause to nothing in this case.

Variable Ratio Reinforcement Schedule:

The player can be driven to catch one particular fish for a quest or to sell. This will trigger the player to take their character fishing. While engaging in the fishing mechanic the player can only ever see identical fish shadows in the water, any one of which might be the one they need for their quest or the one that is worth enough to buy that one in-game item. This means that the player will, ideally, continue to catch fish until they catch the one they desire. The player believes that every next fish could be the fish they want as they are performing an action that could lead to their desired reward on any occasion that they perform it.

With this game, the key investments that a player puts into the game are threefold.

Time:

From the moment a player starts playing any game, they are investing their time and any decision to quit the game is weighed against time already spent. If a player spends two hours and fifty-five minutes waiting to harvest their fruit, then they will be unlikely to delete the game when there are only five minutes left to wait. That is partially due to the build-in anticipation, but it is also the sunk cost fallacy, telling them that if they don’t collect their fruit then that two hours and fifty-five minutes was wasted.

Money:

Once the player has felt the need to speed up a fixed interval reward, they have invested money in their experience. People are loath to waste money so having already spent it they will go to great lengths to convince themselves that it was a good investment. The most effective way of convincing themselves of this is to continue playing.

Personal Flair:

Players can personalise their camp and their in-game avatar to their specifications. They will invest time and money doing this, but they are also investing their own personality. To design your in-game space and how your character should look allows the player to feel as though they have put a piece of themselves into the game. Not only do players love influencing their games in this way but they hate to lose that personalised feeling.