The endowment effect, according to which the possessor of an object appreciates it more greatly than potential owners, first introduced by economist Richard Thaler and later promoted by Psychologist Daniel Kanennehan is now a well-established phenomenon. It stipulates that after individuals own something they establish a property right to the item, which exponentially raises its subjective value. The endowment effect is closely associated with the loss aversion theory that signifies that individuals experience greatly the devastation of losing something than the benefit of obtaining it.
Similar to the traditional markets, studies demonstrate that the endowment effect has an analogous influence in non-traditional markets where items are not easily traded or monetized such as selling and buying of hunting licenses and carbon emission permits. This perception of value not only applies to an innate object but also influences the relations between members of the society, especially lovers. Though endowment effect exists in relationships, it is more prevalent in marriages than in the dating scene. However, it hinders the establishment of a healthy and stable relationship. Besides, it is more evident in women over the age of forty than in men.
The endowment effect is one of the most significant concepts in behavioral economics. Li and Associates (2013) suggests that it strongly influences and individual’s choice of partner and romantic decisions. However, they argue that it is highly evident in the dating scene because at this stage individuals search for certain traits that they hold important in a partner. In the earlier phases of a relationship, complementary qualities including similar perspectives are highly considered than substitutive characteristics such as the ability to undertake particular responsibilities. Knowing each other generates the endowment effect that leads to individuals breaking off the search for partners earlier than if it did not exist. As such, endowment effect facilitates the quick establishment of relationships.
According to Asendorpf, Penke, and Back (2011), the costs of looking for an alternative is great in close relationships, there is fortification of the endowment effect, which results in the decrease of the possibility of divorce for a married couple. This notion may be deemed true because individuals are more committed to their partners if they find their traits interesting. Moreover, the number of people entering into marriages is higher than if there was no endowment effect. Nonetheless, this ideology is weak considering the success of arranged marriages compared to romantic marriages. Heightened inclination for particular qualities, such as physical attractiveness in the earlier stages of a romantic relationship correlates negatively with the subjective satisfaction in the long-run leading to the high probability of divorce. On the contrary, guardians planning an arranged marriage do not emphasize on complementary traits because they are not subject to the endowment effect, rather they consider all features deemed necessary, resulting in a successful marriage. As such, the choice of a relationship and consequently marriage partner based on endowment effect produces non-optimal outcomes.
Few relationships are smooth sailing and achieving success is no small feat. Once a person selects a partner, they tend to become attached creating the endowment effect, whereby the individual is valued more greatly than other potential partners due to the relationship’s existence. As such, because of the huge amount of effort and time that is put in marriages, there is higher endowment effect among the partners than a newly established relation in the dating scene. There is pronounced unwillingness by partners to terminate a marriage even when its continuation is perceived costly since they do not desire to renounce the heavy investments placed in the relationship in the past (Sassler, 2010). Waiving alternative partners as well as the investment of energy and time commits an individual to remain in a relationship even if has adverse outcomes.
Although endowment effect is effective in establishing connections between people, it curtails the manifestation and maintenance of a healthy relationship or marriage. The pleasure obtained from endowment effect facilitates the creation of new relationships; however, it also prevents partners from disengaging because of the associated intense pain. This inclination results in the individuals suffering from the opportunity cost of establishing a greater relationship with other potential partners. Furthermore, in the course of a relationship that culminates in marriage, the preferences of partners may change with the passage of time. Dinner and Colleagues (2011) describes that younger women highly regard attractiveness in their dating sessions; however, older women perceive financial stability as more important. Therefore, because commitment in a relationship is derived from the benefits of the endowment effect, changes in perceptions may cause partners opting out.
In conclusion, many psychologists are the opinion that endowment effect facilitates the establishment of relationships; however, I believe that endowment effect hinders individuals to identify potential suitable partners, resulting in bad outcomes. Therefore, people need to seek external assistance when determining potential suitors to ensure that other traits that are necessary to manage a successful relation are considered.
- Asendorpf, J. B., Penke, L., & Back, M. D. (2011). From dating to mating and relating: Predictors of initial and long‐term outcomes of speed‐dating in a community sample. European Journal of Personality, 25(1), 16-30.
- Dinner, I., Johnson, E. J., Goldstein, D. G., & Liu, K. (2011). Partitioning default effects: why people choose not to choose. Journal of Experimental Psychology: Applied, 17(4), 332.
- Li, N.P., Yong, J.C., Tov, W., Sng, O., Fletcher, G.J., Valentine, K.A., Jiang, Y.F. and Balliet, D. (2013). Mate preferences do predict attraction and choices in the early stages of mate selection. Journal of Personality and Social Psychology, 105(5), 757.
- Sassler, S. (2010). Partnering across the life course: Sex, relationships, and mate selection. Journal of Marriage and Family, 72(3), 557-575.