The endowment effect is a byproduct of loss aversion. It states that once people own something they have established the property right that they now own it. Now that they feel it is there it automatically has more value to that person. Think about when stocks fall and shareholders hold on to their shares for too long because they’re afraid of losing money. They inevitably lose in the end in this situation. The point here is that it’s the cognitive bias that creates the endowment effect, making them value their shares and hold them for too long when the smart thing to do would be to sell them off as soon as possible to minimize loss. An example of the endowment effect in marketing and advertising would be in the way of coupons or discounts. The shopper already feels that they own a part of the product and it increases their willingness to pay. Here are some other ways to use the endowment effect in your marketing strategy.