The Influence of Ownership

If given the option, would you choose an item worth $10 or an item worth $20? The typical response would obviously be to choose the item valued at the higher price point. However, this logical response is not always the norm.

Ownership of an item often changes the value we attribute to it. In a classic experiment, participants were given a mug and then offered to trade the mug for an item of higher retail value (Kahneman et al., 1990). They found 80% of participants would rather maintain possession of the mug than trade for the higher priced item. This is an example of how our emotions can often override our logic.

Getting Attached to the Idea

The endowment effect, or mere ownership effect, is the tendency for individuals to place a higher value on objects once they own them. When we attach positive emotions to material objects, they become more valuable to us than their actual market value. This effect is not limited to material items alone, rather, can apply to ideas, values, or opinions as well.

One example of the endowment effect in the workplace is when individuals show greater investment in projects that they have initiated in some way. Feelings of ownership over a project intensify the emotional connection that an employee has to the project. This in turn increases their commitment, effort, and passion to see the project to the end.    

Unfortunately, this effect can also hinder innovation and progress within organizations. When an individual becomes so attached to their own idea, they may be quick to turn down the ideas of others in favor of their own. Over time, this tunnel vision can negatively impact the organizational culture.

The Value of Ownership

One way to leverage the endowment effect for organizational good is to offer employees equity or stock options. A second option is to focus on psychological ownership. Psychological ownership empowers employees to further the advancement of the organization as they feel more attached and have a sense of control over their work (Buriro et al., 2018). To foster psychological ownership, employees need freedom over their work and a culture in which they feel comfortable voicing their ideas or opinions in the organizational decision-making processes.

One way of fostering psychological ownership is by involving employees in the process of creating their development plans. Another way is through recognition. When employees receive recognition, even for minor accomplishments, they feel a greater sense of value, which increases motivation and commitment to their work.

The Lantern Group has over 25 years of experience working with organizations to address their greatest assets- their people. Reach out to us today to find out more about how we leverage behavioral science insights in our leadership training, work in rewards and recognition, and when crafting communications to motivate and engage.


Buriro, Sobia & Ng, Siew & Jantan, Amer & Ho, Jo & Brohi, Noor. (2018). Psychological Ownership and Employee Engagement.

Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1990). Experimental Tests of the Endowment Effect and the Coase Theorem. Journal of Political Economy98(6), 1325–1348.