Remember when you were younger and then you go to someone’s house and you play with a toy. Then after some time you are supposed to return the toy and you start crying!
That is how any trial software or product works! This is called the Endowment effect!
Both Daniel Kanheman in thinking fast and slow and Dan Ariely in the book Predictably Irrational talk about endowment effect!
When you get a upgrade package to try or you get trial offer for free then you will realise what it means! Once you accept the trial offer for free then it becomes your property! And when the free period ends you would not like to give it away since that would emotionally conflict with your ownership!
Many companies use this as a marketing tool! This is because if you use a product even for a little while and get used to it, more often than not you feel that you are the owner of the product and the little child in you does not want to let go!
Another issue with the endowment effect describes a circumstance in which an individual places a higher value on an object that they already own than the value they would place on that same object if they did not own it.
This is like you already have a car or a mobile and you would have paid a bomb to get it! Then when you try to sell it, you would shockingly realise that only you feel that your phone or your car is having a high value while practically speaking the market value would be much less!
Endowment effect can be clearly seen with items that have an emotional or symbolic significance to the individual.
Research has identified “ownership” and “loss aversion” as the two main psychological reasons causing the endowment effect.
The endowment effect is closely tied to marketing in which companies often try to take advantage of this cognitive bias. This is true specially for products which you may not need but they add only a little value to you. But when you get used to it, the product is yours and then you do not want to give it back or rather you would do anything to keep it!
This is also true for products which you get in installments and by paying just a part of the payment.
So next time you are ‘offered’ a product for trial or under easy installment or just a little down payment; just know that more often that not you WILL end up buying it for sure!
Of course if you wanted it in the first place then just go with it!
Then again ownership is something which is more mental! You feel that it either belongs to you or you belong to it! Like where ever you go, you will always remember your country and state!
Especially when it’s festival time! Sketching a great from my state Shri Kuppalli Venkatappa Puttappa, popularly known by his pen name Kuvempu!
Wish you all a very happy Ugadi!
Shubh ratri!
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