Tag: endowment effect

Brooklyn 99 — Monty Hall Problem

 

Kevin and Ray haven’t seen each other in a while because of their scheduled change and come to a disagreement on the famous Monty Hall problem. Captain Holt believes the probabilities should only be 50/50 since there are two doors remaining, but Kevin, correctly, informs him the odds are 1/3 that you selected the correct initially and 2/3rds that it’s in the other door. The Monty Hall problem has also been covered in the movie 21 and the TV show Numb3rs.

Thanks to James Tierney for the recommendation:

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M&Ms — What are Caramel M&M’s worth to you?

 

 

In this commercial for the new caramel M&M’s, our grocery store employee is trying to buy back M&Ms from customers as they’re leaving the store. The employee offers $2, $3, and his watch to get the M&Ms back even though the customers could easily go through the line again and get a new bag. People tend to value items they possess at a higher rate than they actually paid for them and this action appears irrational since the transaction costs of buying another pack is already low.

Thanks to James Tierney for actually watching the commercials on Hulu:

 

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Impractical Jokes — Auction House Meltdown

The endowment effect in economics is a powerful explainer for irrationality. When people own something, they are often not willing to release an item even when someone is willing to pay more than it’s valued at. One of the famous examples is the coffee mug experiment. In this episode of Impractical Jokers, the guys head to an auction house and have one of them act like a remorseful seller who isn’t ready to part with their belongings. After pissing off the auction house members, the joker isn’t willing to buy his own tires back, which his friends submit to the auction house.

Thanks to Alyssa Lampros for the submission!

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21 — Monty Hall Problem

MIT Professor, Micky Rosa (played by Kevin Spacey) challenges Ben with the Monty Hall problem of selecting a door with a prize hidden behind it. The Monty Hall Problem is based on a statistics brain teaser that insists the optimal choice is to switch your decision after the host reveals what’s behind one of the doors.

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Wendy’s — Endowment of the Double Stack

 

An example of the endowment effect. The customer on the left is willing to give up a dollar but not his Double Stacker. This seems irrational as the Double Stacker only has a market value of one dollar. The endowment effect states that the possessor of a good over-values the good. This is illustrated in the commercial as the customer on the left refuses to give up his Double Stacker. For the classic coffee mug example, see Kahneman, Knetsch, and Thaler (1990).

Clip and summary provided by YouTube User chilibandito.

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YouTube — Trying to Buy People’s Dogs

This prankster is going around Chicago asking people to sell their dog for up to $10,000. Most people aren’t willing to part with their beloved pooch, but some people consider his offer. This clip is a good introduction to the idea of willingness to sell and people’s subject valuation of their possessions.

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