The one psychological bias every Web3 newbie ought to know about

The major difference between Web2 and Web3 is ownership. In Web2, platforms like Facebook and Youtube own the content users upload to them. Creators and users give up their ownership in exchange for reach. Web3 aims to give ownership back to the creators through smart contracts (i.e. programs that run on a blockchain) and DAOs. Here’s the psychology behind ownership and how it affects the transition of creators from Web2 to Web3:

The endowment effect

In a study conducted by Thinking, fast and slow writer and Nobel prize winner Daniel Kahneman, psychologists gave coffee mugs to half of a test group. The subjects which had received mugs were asked for how much they’d be willing to sell the mug for, and the other half was asked how much they would be willing to pay for it.

Interestingly, the mug-owners refused to sell these for less than $5.25, while the “mug-less” were willing to pay $2.75 — at most. Ownership in itself caused the owners to value their mugs higher.

In other words, people are more likely to retain something they own than to acquire it when they don’t own it. This bias is called the endowment effect. The same effect explains why people with “skin in the game” are more likely to stick around.

Web3 platforms are creator-owned. As the platform grows, the creators grow. The endowment effect makes it easier for Web2 creators to uncommit from Web2, while making them more likely to stick with Web3 platforms.

This post was created with Typeshare