Judgement and decision making

Ref:
Mayer, R.E. (1991) Thinking, Problem Solving, Cognition (2nd Ed), WH Freeman & Co

Possession, feelings of ownership and endowment effect.
Ref:
Belk, R. W. (1988). Possessions and the extended self.
Journal of Consumer Research, 15, 139–168.

Carmon, Z., & Ariely, D. (2000). Focusing on the forgone:
How value can appear so different to buyers and
sellers. Journal of Consumer Research, 27, 360–370.

Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1990).
Experimental tests of the endowment effect and the
Coase Theorem. Journal of Political Economy, 98,
1325–1348.
Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991).
Anomalies: The endowment effect, loss aversion, and
status quo bias. Journal of Economic Perspectives, 5,
193–206.

Strahilevitz, M. A., & Loewenstein, G. (1998). The effect
of ownership history on the valuation of objects.
Journal of Consumer Research, 25, 276–289.

Possession, Feeling of Ownership and The Endowment Effect

The fact that people demand much more to give up an object than they would be willing to pay to aquiare it is called the endowment effect. Endowent effect rely on the fact that people value something more once thay have established the ownership or possession right to it compared with when there no ownership or possession right.Judgement and decision mking has ignored the different between factual and subjective feelings of ownership.

Well, in the present study the endowment effect caused by subjective feeling of ownership rather than factual ownership.

The current study was conducted by Jochem Reb. The student of Singapore was used a the subjects. The study was a between participant design with four groups consisted Owners
hip and No Ownwership, Possession and No Possession. The object used was a chocolate bar that was familier to students. Assessment was that the monetary value was an independent variable and and subjective feeling of ownership was a mediator.
30 minutes before the actual study, the possession group was given a chocolate and was told to keep it before participating on an unrelated study while the ownership group was given the chocolate after prticipating on unrelated study. All participant completed a response sheet which contained a series of choices between the chocolate or amount of money.

According to results those who possess the object gave higher monetary value compared with those just own the object. The results showed that the differences in valuation that leads to endowment effect was the effect of possessing those object as well as subsequently feelings of ownership.

The reason why there was a higher monetary valuation and the feeling of endowment towards the possession group was that they were given the object to keep for certain amount of time before the experiment, mean while the ownership group was just given the object immediately at the conduction of the study. The possession group had more time to possess the object and that given them much time to attached to the object compared with the ownership group. So this explains the fact that endowment effect those not rely on the factual ownership of something, but the subjective feelings of ownership of it.

Judgement And Decision Making

People tends to make decision based on different ways. Decision people make depends on what they want from that decision. With regards to the cognitive aspect of human decision making process, has been seen as something that are connected with the environment.According to mayers, people style of decisions are made based on their personality or their environment.When making decision, we tends to use much easy approach rather than doing much of a research before drawing into conclusion.In terms of group decisions, we happens to make decision based on majority vote. On the other hand, when there is group decision, people tends to agree on that decision simply on the fact that they like the person who has made the decision or they liked the organisation etc.

choices, value and frame

According to previous studies, individual do consciously or unconciously makes choices based on preferences, example of this was getting student opinion on what type of application that should be admitted in the school. Student were more likely to prefer the intelectual applicant, and those with more value to be admitted.

There are two types of choices, riskless choices and risk choices. Example of riskless choices is the trade by barter kind of way. In other words it is seen as give and take. The risk choice is where by making choices with the expectation of outcome but not necessary getting the result at that moment, but with the hope of proberbility or assumption.

Framing refers to how important issues are presented or "framed in any given situation. While different frames can yield significantly different results, decisions about which frames to use are almost impossible to resolve and will almost always invite criticism in one way or another.Question order can shape responses by altering the larger context in which respondents think about an issue. Because answers to one question can be shaped by answers to previous ones, questions that are themselves fairly unbiased may create a very different effect when asked in combination. The order in which possible responses are listed may also have important effects on results.