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The Endowment Effect and Thanksgiving

by Phyllis Pollack
December 2008

From the Blog of Phyllis G. Pollack.

Phyllis  Pollack

       I am reading an interesting book, The Science of Settlement by Barry Goldman, MA, JD (ALIABA 2008). In it he discusses how to prepare for and effectively bargain during a negotiation. Towards this end,  Mr. Goldman discusses a lot of different psychological and/or economic principles. One is the “endowment effect” (which I have discussed previously) which means that ‘human beings tend to overvalue anything perceived as “mine.” “ (Id. at 21.) He then quotes from O.W. Holmes:
     

      “It is in the nature of a man’s mind. A thing which you enjoyed and used as your own for a long time, whether property or opinion, takes root in your being and cannot be torn away without your resenting the act and thing to defend yourself, however you came by it.” (Id.)

       In short, people value what belongs to them. (Id. at 21.) This principle seems appropriate this week. It seems to fit in with Thanksgiving: we should value and give thanks for what we have, especially in these trying times. Whatever it is that we do have, no matter how little or how much it may be – value it and give thanks for it.

Biography


Phyllis Pollack with PGP Mediation uses a facilitative, interest-based approach. Her preferred mediation style is facilitative in the belief that the best and most durable resolutions are those achieved by the parties themselves. The parties generally know the business issues and priorities, personalities and obstacles to a successful resolution as well as their own needs better than any mediator or arbitrator. She does not impose her views or make decisions for the parties. Rather, Phyllis assists the parties in creating options that meet the needs and desires of both sides.  When appropriate, visual aids are used in preparing discussions and illustrating possible solutions. On the other hand, she is not averse to being proactive and offering a generous dose of reality, particularly when the process may have stalled due to unrealistic expectations of attorney or client, a failure to focus on needs rather than demands, or when one or more parties need to be reminded of the potential consequences of their failure to reach an agreement.



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