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%) of the students in the first class ended up collecting the necessary five points. But, in the second class, a staggering 82% 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?

**Difference between a loss and a gain**

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 $20 bill than they would be happy if they found $20.

**The value of ownership**

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.