CONCEPT
The Endowment Effect
Thaler, Kahneman, and Tversky's demonstration that possession inflates value — the bias that explains why experienced professionals overvalue the skills AI is automating.
The endowment effect is the systematic tendency to value things more highly simply because one possesses them. Demonstrated most famously in the 1990 coffee mug experiment, in which subjects demanded roughly twice as much to sell a mug as subjects without mugs were willing to pay to acquire one, the effect produces a gap between willingness-to-accept and willingness-to-pay that classical economics cannot explain. In the AI context, the endowment effect operates on professional expertise with particular force. The expert has invested years in a skill, built an identity around it, organized a career around its value. The expert's valuation of the skill is inflated relative to its market value, and the inflation is proportional to the depth of investment. The twenty-year veteran values her implementation skill more than the two-year junior does — not because the skill is objectively more valuable but because the endowment is deeper.
In The You On AI Field Guide
The endowment effect was formalized through a series of experiments by Tversky, Kahneman, and Richard Thaler in the late
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