I am currently reading Michael Shermer’s “Mind of the Market”, and I got to thinking…

Prove me wrong. I’ve looked at a lot of running blogs in the last few months. Several of these lucky bloggers have been fortunate enough to have received some products to review on their website. I have not seen anyone who got something for free go on to give it a negative review. If you have, let me know, prove me wrong. I’d have a lot of respect for anyone that was that honest. Let’s face it, the incentive system is to praise the product in hopes that the company may send you some other products to review in the future. The company knows this, that’s why they will often have bloggers review their products. I put my readers to the challenge?

In general, I don’t put a lot of stock in product reviews. I have even written some of my own running product reviews. The reason most product reviews are flawed is because of the endowment effect. The endowment effect states that people value a good or service more once it is in their property. Thus, people value things that they own more than things they do not own. This leads to a lot of reviews that are done with cloudy judgment, as the reviwer is often experiencing self justification.

Check out the RunnersWorld Discussion Thread, constant debates about the Garmin 405 vs. the Garmin 305. Once again, anyone who owns the Garmin 405 or the Garmin 305 is going to be influenced by the Endowment Effect or the Status Quo Bias. They are going to value the watch that they own more highly than the watch someone else owns and the owners of the Garmin 405 (which includes me) are going to be even more influenced due to the increased price of the Garmin 405. My Garmin 405 Review has received over a thousand visits, there are a lot of individuals wanting to find out if the Garmin 405 is worth the upgrade.

I tried to be objective when reviewing the Garmin 405. At the end of my review I stated that I would only upgrade to the Garmin 405 if you are a serious runner and will use the Garmin 405 on a daily basis. The watch has some great features, it looks a lot nicer, finds the satellites faster, but in reality it’s not a huge improvement over the Garmin 305/205. However, I run almost every day, close to an hour, and I’ll generally run about 7-8 hours per week, thus I’ll get more use out of the watch than a recreational runner. I even own Garmin Stock, so my readers will know that I didn’t sell out and say it was a “must have” or “the best watch ever.”

You’re not going to find too many runners who just spent $300-$350 on a Garmin 405, say that it was a complete waste of money. They will rationalize their decision and prove to themselves that it was a smart purchase. It would be interesting to test the endowment effect on runners. The Garmin 405 cost $150 more dollars than the Garmin 305, which is a substantial price difference.

The endowment effect is also why individuals have trouble recognizing a sunk cost. In general, I am pretty quick to cut my losses and I will often hedge my bets. In the past three years, the only running shoe that I hated was the Asics Kinsei, which is also the most expensive shoe that I have ever owned. I ran in that shoe about 100 miles and then turned it into my “Casual Friday Shoe” at work. I wonder how many runners keep running in a shoe, even if they do not like it.

If you want an example of RunColo cutting his losses, check out Nathan Speed 4 Review. I went through two other fuel belts before I purchased the Nathan Speed 4. The Amphipod belt was horrible, the bottles fell out, it cut into my side, etc. The Fuel Belt was adequate, but the Nathan Speed 4 is perfection.

My guess is the endowment effect is even amplified on reviews of books. I mentioned in Once a Runner Review the number of five star reviews on amazon. I’ve noticed that most books have a large number of five star reviews. When you invest hours and hours to read a book, you often want to tell someone how good the book is, due to the time & money invested (sunk cost).

In conclusion, if you’re a runner that hangs on to all of your old running shoes, and your old race shirts you’re probably being affected by the endowment effect. So clean out your closet, donate those old running shirts to Goodwill and toss those old running shoes in the dumpster!