![\"\"](\"http:\/\/web.colby.edu\/cogblog\/files\/2017\/04\/imgres-2.jpg\")
<\/a>Figure 1: United Airlines aircraft<\/p><\/div>\n
your pick), I would highly recommend\u00a0familiarizing yourself<\/a>. However, to save you some time, I will provide you with a short recap of what happened. On April 11, 2017 United Airlines had over booked a flight from Chicago to Louisville and needed to make room for four members of the flight crew. You can probably guess\u00a0where this is going – \u00a0an overbooked flight with four additional seats needed\u00a0means that four passengers\u00a0have to change to a later flight (math!). No one wanted to volunteer to give up their seat,\u00a0so United Airlines bumped four passengers who were already seated\u00a0from this flight. For whatever reason, one man really<\/em> did not want\u00a0to give up his seat that he had already paid for. Thus, United Airlines underwent an “involuntary de-boarding situation” and thought that it would be a good idea to physically remove this man while he was kicking and screaming. Fortunately for us, and unfortunately for United Airlines, this incident was caught by many people on video\u00a0and then posted to social media. If you’re curious about\u00a0what United Airlines missed and how they could have potentially avoided the bad PR they incurred after the event, you should\u00a0continue reading. No matter if you think United Airlines was in the wrong, or that the man should have just given up his seat like the others who were asked and did so, you may be surprised to know that there’s actually an underlying psychological explanation for all this: a cognitive bias known as the endowment effect. The endowment effect, coined by Thaler (1980), occurs when you value something that you already own, i.e. the airline seat you purchased and were sitting in, at a higher value than if you were trying to obtain the same item. Consequently, if the tides were reversed and you were the one who was trying to obtain said item,\u00a0the amount that you’d be willing to pay for it\u00a0is less than the amount that you’d be willing to sell it for had you already possessed it (Thaler, 1980).<\/p>\n The endowment effect has been recorded and studied in both economics and psychology. In an example not as extreme as the United Airlines one, the endowment effect is\u00a0evidenced in the context of March Madness tickets. The NCAA March Madness basketball tournament\u00a0is a very popular sporting event, so tickets to the<\/p>\n Figure\u00a02: March Madness Tickets<\/p><\/div>\n games can be quite expensive. Using buying and selling price estimates for NCAA Final Four tickets (aka the semi-finals) Carmon and Ariely (2000) show\u00a0evidence of the endowment effect. In their study, the hypothetical prices that participants were willing to sell Final Four\u00a0tickets that they were\u00a0given were on average 14 times more than the hypothetical price that other participants\u00a0were willing to buy them for. Other studies also\u00a0demonstrate the endowment effect, including the occurrence in pre-school children<\/a> (Hood, Weltzien, Marsh, & Kanngiesser, 2016) and even capuchin monkeys<\/a> (Lakshminaryanan, Chen, & Santos, 2008).<\/p>\n There are two main\u00a0theories that explain the endowment effect: loss aversion and mere ownership. Loss aversion is the tendency for people to prefer avoiding a loss over attaining a gain of the same amount. For example, if you were given the choice of either the\u00a0risk of losing<\/a> $10 on a bet or the chance of\u00a0finding $10 on the street, you would want to not risk losing the money. One of the most notable experiments demonstrating how loss aversion can explain the endowment effect was\u00a0conducted by\u00a0Kahneman, Knetsche, and Thaler\u00a0(1990). In this experiment, half of the participants\u00a0were given a coffee mug while the other half did not receive anything. The researchers found\u00a0that participants were only willing to sell their mug at a price significantly higher than the price that those buying the goods were willing to pay for them, and additionally\u00a0that the sellers were not willing to trade their mug for pens, even though they were of equal monetary value.\u00a0Kahneman et al. (1990) explains that this happens because the sellers have established their ownership of the good, thus\u00a0the negative feeling that they would experience\u00a0from letting go of the item is greater than the benefits they’d get if they were to obtain it.<\/p>\n The second theory, mere ownership, can also\u00a0help explain the endowment effect.<\/p>\n Figure 3: A photo representing possessiveness over an object<\/p><\/div>\n This theory is based on the idea that the unwillingness to let go of an item is because they\u00a0associate the particular good with themselves. Going back to the\u00a0airline example, this second theory says\u00a0that the man didn’t want to give up his seat\u00a0simply because he owned it and had established it was his by sitting in it. A study by Morewedge, Shu, Gilbert, & Wilson (2009)\u00a0uses mugs to\u00a0show that when the buyer already<\/em> owns the mug being sold, they are now willing to pay the high price that the seller is asking for. This study shows evidence that the endowment effect has disappeared if the item is already owned by the buyer, thus pointing to the mere ownership effect. If you’re not convinced yet, Tom (2004) also uses mugs (see a theme here?) to demonstrate\u00a0that the endowment effect is more pronounced when the item being sold is one’s own college insignia mug. Would you\u00a0ascribe\u00a0a higher selling price on\u00a0your Colby mug than a plain mug with no personal connection? This study suggests you would.<\/p>\n One bridge that connects the endowment effect and cognitive psychology is attention. Attention is a limited cognitive resource, and we must choose how we allocate this resource to certain tasks (Kahneman, 1973).\u00a0Opposed to automatic processing, which does not drain cognitive resources and is something that we are\u00a0unaware of when they are happening, controlled processes use up a lot of attentional resources and are utilized\u00a0for doing things that are new to us. Think about learning how to drive a stick-shift car; you need to actively pay attention\u00a0to every motion you are doing, such as changing gears, steering, and putting your foot on the right pedals at the right time (McBride & Cutting, 2015). Putting more attentional resources into a task will help us eventually learn that task better\u00a0– after a while driving stick will become automatic!<\/p>\n Now that we have some background on what attention is, we can now talk about the role of attentional shift in helping to explain\u00a0the endowment effect. What is attentional shift you ask? Well, if you are reading this post and there is\u00a0suddenly a neon dot displayed on the screen, or maybe the fire alarm starts to go off, your attention will\u00a0be drawn to these other stimuli. These are\u00a0examples of exogenous, or involuntary, attentional shifts. There are also endogenous, or intentional shifts. An example of this would be\u00a0shifting your focus back to reading this blog post away from\u00a0focusing on the people walking by near you.<\/p>\n In a study by Ashby, Dickert and Gl\u00f6ckner (2012), eye movement technology was used to track where participants focused their attention. In this experiment, participants were either told they were the buyer or the seller of a lottery ticket. These lottery tickets had two outcomes on them: one low outcome (i.e. only winning a small amount) and one high outcome in which the earnings are a large amount. The results showed that the buyers of the lottery tickets shifted their attention to the low outcome area of the ticket and the sellers of the ticket shifted their attention to the high outcome area. This difference in attentional shift depending on if one is the buyer or seller indicates that buyers and sellers shift their attention to focus on different attributes of an object. If sellers are more focused on the more positive aspects and buys on the more negative ones, then it makes sense why sellers would price the item they’re selling higher than the amount a buyer would be willing to pay for the same item.<\/p>\n
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