Lessees and Idiosyncratic Valuation 2 Beyond Ownership: Lessees and Idiosyncratic Valuation Introduction It is widely accepted that willingness to accept exceeds willingness to pay at least in part due to the endowment effect, the “increased value of a good to an individual when the good becomes part of the individual's endowment (as citied in Kahneman, Knetsch, & Thaler, 1990, p. 2).” The numerous studies on the effect support the existence of an “instant endowment effect,” since the value of the good increases immediately after the person receives it (Kahneman et al., 1990, p. 1342). Different from greedy strategies, reluctance to participate in the market, or a preference for the status quo, the endowment effect acts on sellers. Additionally, the vast literature on the endowment effect includes findings that although the effect begins immediately after receipt of a good, it strengthens as duration of ownership increases, such that the owner’s valuation of the good also escalates (Strahilevitz & Loewenstein, 1998). What do these findings tell us about the most complex and important type of property: real estate? Real estate stands out among other types of property because homeownership is defined by a host of characteristics that are not shared by any other type of property ownership. First, since no two sections of the earth are exactly alike, ownership of a piece of real estate is a unique experience (Fennel, 2009). So long as property protection rules remain in place, each owner controls something that no one else can provide. Additionally, a home often becomes a sentimental experience. One might invest time, energy, and funds into improving the home, reach certain milestones within the house, or build a social network of family and friends within the home’s vicinity.