All of us are immensely attached to our possessions. Now, Standford University researchers have an interesting story to reveal.
Writing about their work in the journal Neuron, the researchers have said that understanding the mechanisms linked with the potential loss of possession may have important implications for both neuroscience and economics.
The researchers say that people tendency to prefer the items they own when compared to similar items that they do not own is known as "endowment effect", and that this phenomenon violates rational choice theory that states that ownership should not influence preferences.
"While the endowment effect occurs regularly and robustly in both laboratory and natural settings, the psychological and neural mechanisms underlying this effect remain unclear," says study author Dr. Brian Knutson from Stanford University.
Along with his colleagues, Dr. Knutson used event-related functional magnetic resonance imaging to scan subjects' brains while they engaged in tasks designed to elicit the endowment effect.
The researchers asked the subjects to buy certain products, sell other products given to them before the experiment, and choose between yet other products and cash.
The study was focussed on three relevant brain regions: the nucleus accumbens (NAcc), which is associated with the prediction of monetary gain and product preference; the insula, which is associated with the prediction of monetary loss; and the mesial prefrontal cortex (MPFC), which is implicated in updating initial predictions of monetary gain.
Analysing the brain scans, the researchers found that the subjects showed greater NAcc activation for preferred products across buying and selling conditions combined.
In contrast, MPFC activation correlated negatively with price during buying, but positively with price during selling.
The researchers also observed that right insular activation in response to preferred products predicted individual differences in susceptibility to the endowment effect.
According to them, the observations made by them suggest that the endowment effect is not promoted by an enhanced attraction to possessions, but that ownership increases value by enhancing the salience of the possible loss of preferred products.
"Our findings provide support for one mechanism involving increased aversion to loss of possessions during selling and illustrate that neuroscience methods can advance economic theory not only by breaking down apparently unitary phenomena, such as choice, into constituent components, like anticipation of gain or loss, but also by specifying when each of these components matters," says Dr. Knutson. (ANI)