• The Cowry Consulting Team

Online Endowment: Do we judge the value of online vs. in person products differently?

Online EndowmentMore money is being spent than ever in retail.

However, with the over-crowded shops becoming increasingly off-putting, more and more people are going online to do their shopping. Whilst it may be easy to do, shopping online has interesting effects on the way that we think.

Recent research looked at how we judged the value of products online versus in person. Participants were asked to pay whatever they deemed reasonable for a product.

We are willing to pay significantly more for real life objects than their virtual counterpart. For example, we are prepared to pay $9.59 for a physical book, however just $6.94 for the online version. On iTunes, we are prepared to pay $5.07 for a film, but for the DVD we will pay $8.98.

Researchers suggest that these results are driven by the increased levels of endowment felt when we have the physical object infront of us. It makes the object more tangible and drives our feelings of ownership over the product.

Researchers go on to theorise 3 mediating factors affecting the degree of endowment we tend to feel towards products.

The first is permanence, the degree to which something is going to be around plays a big role - rented items clearly don’t elicit as strong endowment as items we own.

Secondly is the relevance to consumers identity. If we identify strongly with a product, then this predicts higher purchase intention towards it. Finally there is the degree of our need for control, those with have a low need for control will not interact with objects as much and so feel lower ownership over it.

However what is also interesting, is that physical objects were enjoyed at exactly the same level as their digital counterparts. The endowment effect and our desire for ownership clearly is a big driver in our cognition, affecting our judgements of value.

However whilst we may pay more for physical objects, this doesn’t mean we will actually enjoy them any more.

Atasoy, O., & Morewedge, C. K. (2017).
Digital goods are valued less than physical goods.
Journal of Consumer Research.
https://doi.org/10.1093/jcr/ucx102

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