002: The Endowment Effect
I've spent countless hours appreciating the exquisite craftsmanship, artistic design, prestige, and fascinating history behind each wristwatch that I've had the privilege to own and showcase. However, over time, I've realized there's more to my passion for these ticking treasures than meets the eye—a psychological aspect known as the Endowment Effect.
The Endowment Effect is a term coined by behavioral economist Richard Thaler. It encapsulates the phenomenon wherein we ascribe more value to things merely because we own them. We inherently demand more to give up an object than we would be willing to pay to obtain it. This theory has helped me understand the deep-rooted emotional connections I have with my timepieces and the insatiable desire to enhance my collection.
Every time I acquire a new watch for my personal collection, it feels like a new story unfolding. The watch becomes a part of my identity, reflecting my tastes, my love for history and fine artistry, and my aspirations. It's no longer just a beautifully crafted piece of machinery; it's an embodiment of my personal narrative. This enhanced emotional attachment, resulting from ownership, inflates the value I perceive the watch to have—an intrinsic value, imbued with personal sentiment, far beyond its price tag.
Owning a watch store has only deepened this effect. Every timepiece I bring into my shop becomes part of a larger narrative, the story of my business. Parting with them—when they're sold to a discerning customer—is a bittersweet moment. On one hand, I feel a sense of satisfaction in finding them a new home. On the other, I experience a poignant pang of loss, a consequence of the Endowment Effect.
This phenomenon also informs my interactions with customers. I understand when someone balks at the price of a high-end timepiece; they don't yet see the intangible value that ownership can bring. When a customer finally decides to make a purchase, I know they are on the cusp of experiencing the same personal attachment I've felt many times before—the beginning of their own Endowment Effect journey.
Moreover, the Endowment Effect explains why my desire to acquire new watches—both for my personal collection and for my store—never quite seems satisfied. Each new watch promises to add to my narrative, contributing a new chapter to the ongoing story of my passion and my business.
Through the lens of the Endowment Effect, what may initially seem like an extravagant indulgence transforms into a deeply personal, emotionally satisfying endeavor. It underscores the simple truth that as a watch collector and shop owner, the real value of my collection lies not just in the timepieces themselves, but in the personal narratives they represent, and the joy they bring to me, my customers, and fellow enthusiasts.
I'm an ardent watch collector and historian, tracing the ebb and flow of time through the lens of horology. My fascination began with the intricate mechanisms that tick beneath each dial and has grown...
Interesting read! 🍻 Cheers
Fascinating, I suppose the opposite is true too, when I've failed to bond with a watch, for whatever reason, I'm prepared to let it go at a loss or more often in my case trade it for something I hope will satisfy & cover the mistake of the initial purchase that I didn't like 🤔
Interesting perspective, Thank you 👍
Interesting read! 🍻 Cheers
Thank you! There is a lot more where that came from! Stay tuned tomorrow; I'm going to be doing this every day for a hot minute.
Fascinating, I suppose the opposite is true too, when I've failed to bond with a watch, for whatever reason, I'm prepared to let it go at a loss or more often in my case trade it for something I hope will satisfy & cover the mistake of the initial purchase that I didn't like 🤔
Interesting perspective, Thank you 👍
Yeah! This is something called "Loss Aversion," which will be a topic I cover in this series. Indeed, our connection or emotional bond to an item can heavily influence our decisions, just as much as our sense of ownership does. When that bond isn't there, we are more willing to let go, even at a loss, for the chance to acquire something more fulfilling or satisfying. This highlights the intricate dance between emotional investment and practical considerations in our decision-making processes.
I appreciate your thoughtful perspective and your willingness to share your personal experiences. It's interactions like these that truly enrich our understanding of the nuances of watch collecting. I hope to see your responses in the future articles because your insite was very helpful
Great read, cheers. Yes, more psych papers needed here, us watch nerds love this stuff