The pain of losing money is about twice as potent as the pleasure of gaining it, writes the Irish Independent in an article about the housing slump and behavioural economics. For owners who are game to try the market, it says research suggests sellers who list with a price with a $100 ending get closer offers than those who listed homes with $1,000 endings (who got closer offers than those with $10,000 endings).
Why do house sales dry up when house prices are falling? Economist Tim Harford blogs that among the many reasons is prospect theory – our tendency to care more about “avoiding losses than banking gains”. Homeowners are reluctant to sell at a loss and, the theory goes, more willing to lose the sale if the offer is less than they paid.
Why do we return so much of what we buy online, asks a blog from Time. Online sales increased in the holiday season in the United States – but so did the rate of product returns. The blogger suggests we might shop impulsively more online and that actually being able to hold an object before buying it “makes you more committed to your purchase”.
