Richard Thaler
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Appearances Over Time
Podcast Appearances
I didn't get a mug.
Fair enough.
Okay.
So what happens?
The people who have the mugs really don't want to sell them.
The people who don't have mugs aren't all that interested in buying one.
There is a market, but the people who have a mug demand about twice as much to give it up.
As the ones who don't have a mug are willing to buy it.
Oh.
So instead of half the mugs trading, we get about 20%.
Okay.
So what's the lesson?
You know this old Stephen Sills song, Love the One You're With?
Sure.
I call this the endowment effect.
That if you're endowed with something...
You want to keep it.
You won't give it up.
But you don't have it?
You know, okay, if the price is right, I'll buy it.