Last semester I experimented with a new idea in my consumer behavior class. I gave pop quizzes on the assigned readings but with a little twist.

First and foremost, students were not required to take the quizzes. But if they did take a quiz and they answered it correctly, they would earn a point. If they collected five points over the course of the semester, they would be able to opt-out of the final exam if they chose.

There was one catch: if the students took a quiz and answered it incorrectly, then they would lose a point and fall behind in their effort to get to the magic number of five.

I had two different sections of the class, one with 35 students and the other with 27. The required effort in both classes was exactly the same (earn five points from the quizzes). The prize in both classes was also exactly the same (opting out of the final).

So, there should have really not been much of a difference between the two classes regarding their performance on the quizzes. Yet, there was a difference in performance. In fact, quite a substantial difference.

Fewer than half (43 percent) of the students in the first class ended up collecting the necessary five points. But, in the second class, a staggering 82 percent of the students did so.

Could it be that one class had better, more motivated students than the other?

I checked the final course grades for all students in both sections and the grade average for the two sections was almost identical.

So, what happened?


A subtle but key difference was in the way I presented the information about the quizzes and the prize of the optional final exam to the students.

Here is what I did:

In the first class, the students were told that the final exam was required but they could earn the right to not take it with five points from the quizzes.

In the second class, however, they were told that the final exam was optional. But, they could lose that right if they did not get five points from the quizzes.

In other words, the exact same offer was presented either as a potential gain (earning the right to an optional final) or a potential loss (losing the right to an optional final).

This relates to the idea of “loss aversion” – i.e., the amount of pain we feel for losing something is higher than the joy we feel for gaining the same thing. For example, most people would be more upset if they lost a US$20 bill than they would be happy if they found $20.


So, in the case of my class, could it be that the increased value for these students was a function of them “owning” the prize they would lose?

Quite possibly, given that the concept of ownership has been shown to impact perceptions of value.

In a related study, behavioral economist Dan Ariely and marketing professor Ziv Carmon talked with Duke students who had won Final Four tickets in the lottery. They asked them how much it would take to sell their ticket.

They also contacted students who wanted to go the Final Four but did not win tickets in the lottery, asking them how much they would be willing to spend to buy one.

Students who had a ticket to the game agreed to sell it for an average price of $1,400, about eight times more than what students interested in buying were willing to pay ($170).

This is known as the “endowment effect,” a concept introduced by behavioral economist Richard Thaler, which suggests that owners of an item evaluate it significantly more favorably than nonowners. This explains why people expect much more to give up an object than they are willing to pay to obtain it.

In a study using coffee mugs, marketing professor at Boston University Carey Morewedge and his colleagues suggested that ownership plays an important role in our perceived value of an item. Often, what we own has also sentimental value for us besides just its functional value.


As the semester ended, I shared with my students in both classes what happened and asked for their thoughts.

“I didn’t want to give it up,” said one student referring to having the right to the optional final. Other classmates nodded in agreement.

Given that ownership, in this case, was not about a tangible object, it is hard to imagine that the “endowment effect” was due to sentimental reasons. Yet, it was strong enough to affect the students’ motivation and performance.

The fact that they had the right to an “optional final” made them perceive it as more valuable than their counterparts who did not have it. Consequently, it increased their motivation to do what was necessary to not lose it.

As “loss aversion” suggests, the disappointment for losing the optional final would have been higher than the excitement for earning it. The motivation of the students in the two classes seems to have been affected accordingly.

So, how can we use these findings to get our students more motivated?

Traditionally we use rewards to encourage desired behavior in the form of “if you do this, then you earn that.” But by framing it this way, we may unintentionally devalue the reward and make students less likely to appreciate it.

Lack of ownership (even for nontangible objects) may lead to lower motivation.

Instead, what if we would offer the reward to everyone but then take it away from those who did not engage in the desired behavior? It seems a bit harsh, but it may also be more effective.

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