The sale of high-end jewelry is never just a financial transaction. And behind every piece brought to dealers lies a complicated emotional landscape — driven in part by memory and identity, social signaling and fear of loss — as well as deeply ingrained human relationships to stuff. Behavioral economics, which is the study of how psychological factors impact economic decisions, provides insight into why throwing away luxury goods elicits such a strong emotional response and leads to sometimes irrational behavior that goes against pure financial value.
The Endowment Effect Amplification
In traditional economic theory, a $10,000 diamond bracelet should be equally appealing whether you are buying or selling it, after all — its value is objective. Behavioral economics reveals the flaw in this assumption with the “endowment effect”: we value things more when we own them than when we don’t, simply because we own them.
For high-end jewelry, this magnification grows exponentially. Research indicates that the endowment effect becomes stronger for items to which we are emotionally connected, uniquely own or which have symbolic value—qualities that would include luxury jewelry. And a ring, a wedding ring isn’t just a ring; it’s a marriage symbol, the physical embodiment of that pledge, an ever-present reminder of that commitment. This phenomenon creates the endowment effect, which causes individuals to demand 2-3x more when selling items and less than they’d be willing to pay for exactly the same item.
This results in having a long-standing seller fantasy, colliding with market reality. Sellers attach to a price they paid (frequently artificially high retail prices with tremendous markups) or sentimental value that has no marketplace equivalent. Objective buyers don’t have those emotional ties and see raw material. The gulf creates frustration, a sense of unfairness and emotional pain that far transcends the money at issue.
The professionals at Bkk Diamond manage that dance every day, realizing that their jobs extend beyond simply trying to gauge the value of jewelry into becoming de facto grief counselors, helping sellers emotionally deal with the gap between what pieces mean to them personally and what consumers will pay.
Loss Aversion as the Pain of Selling
Behavioral economics shows us that losses are psychologically about twice as bad as gains are good. This “loss aversion” has a particularly strong impact on the world of luxury jewelry sales because selling feels like loss, even when doing so is financially rational.
Imagine someone selling a $5,000 heirloom necklace to pay for a $5,000 trip. Economically speaking this might not mean anything (just exchanging one $5,000 asset for another). Psychologically, it feels awful because the cost — losing a necklace — comes in a way more immediate and tangible than the reward, basking in that free vacation someday down the road. Selling feels like failure, foolishness or betrayal even when it’s the right thing to do. Loss aversion causes investors to act irrationally at times.
This psychological agony results in predictable irrationalities:
Holding too long People hold onto unwanted jewelry for years because selling it feels worse than the burden of ownership. They pay insurance, storage rental and opportunity costs instead of enduring the psychic pain of ushering their goods out the door.
Selling too desperately: In a financial crisis that requires the sale of assets, loss aversion unites with desperation and people take tempting low offers rather than waiting for better ones. A rational conclusion is overshadowed by the desire to put a stop to it as quickly and painlessly as possible.
Post-sale regret: Even when sellers are paid full market value for their companies, loss aversion kicks in and they tend to fixate on what they lost due to the trade rather than what they gained.
The Luxury Sunk Cost Fallacy
The “sunk cost fallacy” is our tendency to keep throwing money or time at something because we’ve already thrown so much, even if it no longer makes sense for us to do so. For high-end jewelry, this is powerfully true.
Twenty years ago, a woman purchased a $15,000 designer necklace. She’s always hated it, never wears it, but won’t sell it because “I paid $15,000 — I can’t get rid of it for $6,000.” The $15,000 is a sunk cost; it’s gone down the drain and there’s nothing she can do about that now. She would optimally sell at $6,000 (obtaining an additional $6,000 and eliminating the purchase of insurance) or not sell unless it supplies her with $6,000+ worth of service. Instead, the sunk cost traps her into a decision that makes no financial sense — and this decision is neither rational in financial terms, nor does it make emotional sense either.
The sunk cost fallacy combines with the endowment effect and aversion to loss to form a potent cocktail of psychological forces that lead people away from decisions that are consonant with their current preferences and situation. They are captured by decisions of the past that can’t be altered rather than optimizing for today and tomorrow.
Identity Economics and Luxury Divestment
Recent work in behavioral economics, for example that on “identity economics,” finds that our self-conception matters a great deal to the economic decisions we make. Identity issues prevail for high-end jewellery.
Luxury jewelry is identity — who we are, what matters to us, the social status and taste through which we express ourselves or our success. The act of selling luxury furnishings doesn’t just strip us of our possessions, it can also feel like selling a part our self. The Cartier watch is not just a watch — it’s an embodiment of success, a signifier that “you’ve made it.” Selling it feels like a token of failure, downward mobility or lost status.
It is this threat to one’s identity that gives rise to intense defensive responses. People may:
Refuse to sell at any stage, even when you are feeling financially desperate or even bankrupt because ownership of the power identity is more important than money.
Asking for pie-in-the-sky prices when you have real offers, is not necessarily a lack of understanding of the value or the marketplace but having to give in and accept market price puts up temporary obstacles that last as long as it takes to work them out somehow.
Feel a disproportionate amount of shame and embarrassment over selling
At places like Bkk Diamond, the professionals develop a sensitivity to these dimensions of identity, understanding that for many sellers, selling is a matter of mourning an identity or life stage they are leaving behind. The economic deal is in reality a leverage toward an acceptance of changed circumstances.
Mental Accounting and Luxury Spending
“Mental accounting” — how our brains treat money differently based on arbitrary categories — is a major factor driving luxury jewelry decisions. Money people spend on jewelry is from the “investment” or “special occasions” part of the brain, not every day purchases. This segmentation causes jewelry to seem less of a luxury than it actually is.
But when you sell, the proceeds frequently have to flow into other mental accounts — “emergency fund,” “bills” or “necessary expenses”— that makes for a psychological asymmetry. The purchase felt special and justified; the sale feels desperate and embittering. This asymmetry is a big reason why it pains us more to sell than to buy, even when the buying got us into financial trouble that the selling would solve.
Mental accounting can help justify how people make contradictory choices about jewelry too. Someone may refuse to part with a $3,000 bracelet while mired in debt, but be willing to spend that much on vacation by putting it on credit. The vacation comes from the mental “experience” account, the bracelet is in one corner of their brain (the “investment” category), and debt shows up somewhere else — which means that they fail to connect the dots between selling the bracelet when it can prevent them from falling into debt.
The Anniversary and Occasion Trap
High-end jewelry often marks an occasion — a wedding, an anniversary, a birthday or graduation. Behavioral economics shows how such “occasion anchoring” can cloud selling decisions.
Each event-related item bears not only memories but social obligations. A 25th anniversary necklace isn’t simply jewelry, but rather it is the love that was behind presenting it, and also the emotions involved on the day as well as what the moment represented. Selling feels like commodifying the occasion, relationship or celebration — even though objectively these things are separate from jewelry.
It results in an overattachment to occasion wear pieces in relation to their actual use. For instance, someone might have three similar necklaces — one bought on a whim, another received as an anniversary gift and the third inherited from a grandmother. The anniversary piece, while objectively maybe the least attractive or valuable, feels unsalable due to its occasion association.
Present Bias and Delayed Selling
Behavioral economics goes so far as to name this tendency “present bias” — our inclination to overvalue present costs and benefits relative to future ones. For luxury jewelry sales, present bias becomes a procrastination trap.
The benefits of selling are often future-looking: getting insurance off your back, deploying the money you make so that it grows in value and shrinks in obligation, casting off a psychological burden of clutter. These future advantages seem abstract and removed. The costs are front and center: the pain of selling, the effort of finding buyers, the unpleasantness of negotiation. Present bias causes people to perpetuate selling day after day, even when they know better.
This procrastination is costly. Jewelry could lose value (especially fashion pieces), insurance and storage come with costs, and opportunity costs multiply. And yet present bias leaves people “planning to sell eventually” for years or decades without taking any action — a particularly expensive form of decision paralysis fueled by some predictable psychological biases.
The Comparison Trap
Behavioral economics has demonstrated we evaluate things in relation to other things rather than their absolute value. This leads to distortions for luxury jewelry.
Someone looking up the sales of jewelry / jewellery finds comparable items for sale online at inflated prices (high street shops selling, optimistic private sellers and scams). What these comparisons do is set unrealistic expectations. When pros bid to real market value, it seems like a low-ball offer even though the offer is completely reasonable.
The trap of comparison does not operate uniformly from one context to another. (Simply comparing someone’s inherited jewelry to the jewelry seen on estate sale advertisements can manage expectations.) A buyer that compares to retail listings/ inflated appraisals sets themselves up for impossible standards. There hasn’t been any change in the true value of the jewelry, but comparison contexts drastically shift perceived value and satisfaction with offers received.
Regret Aversion and Decision Paralysis
“Regret aversion” — the behavior of staying away from choices one will later regret — significantly determines luxury jewelry purchases. The decision to sell is theoretically reversible (you could, theoretically, use the proceeds to buy similar jewelry down the line) but can feel irreversible in practice — particularly when it comes to inherited or historically significant pieces.
This generates paralysis. What if you sell and then regret not holding on? And what if the prices go up and you find out you sold for too little? What if family members are resentful of your choice? These prospective regrets are more powerful than the current gains of selling, leading to endless procrastination.
“Interestingly, regret aversion tends to be about the wrong potential regrets. People fear they will rue selling the thing later, but maybe it is the ENOT you’ll be regretting — not having enough money? Not being as minimalistic and unburdened as you’d like to feel really feel in your soul (this one I can attest to)? An unsold life untweaked? The status-quo bias makes anticipated regrets for changing more psychologically salient than those for remaining stuck.
The Peak-End Rule and Remembering Your Jewelry
The “peak-end rule” says that we remember experiences by their peak (most intense) moment and their end, not the average of every moment or based on how long it lasts. For jewelry, that means our memories are of receiving it (a usually positive peak) and maybe a couple of intense wears, and long stretches of time in between where its filling space in your closet.
This selective memory flatters us into believing that jewelry was more important to our life stories than it really was. A necklace worn twice is more special in retrospect than clothing worn repeatedly, fans said, for the simple reason that those two times were memorable highs. This skewed memory affects sales decisions, where pieces feel too important to sell when an honest perspective would lend that they’d had little real world impact.
Status Quo Bias and Defaulting
Maybe the utmost potent behavioral economics finding for luxury jewelry is “status quo bias” — our propensity to stay with existing conditions even if a shift would make them better. But for those who own jewelry, the status quo is holding onto what they’ve got. Selling is an active decision; keeping requires nothing.
This bias interacts with all the other psychological elements we talked about: loss aversion makes saving the default feel safer, endowment effect makes owned jewelry seem more valuable and regret aversion makes saving feel like non-decision (avoiding potential regret of active choice). Together, these biases create powerful inertia that will continue to leave people holding large quantities of jewelry they neither want nor use and gain nothing from.
Overcoming status quo bias either takes crisis (forced sales in moments of financial panic) or willful thinking, decisions to override default preferences—again: keeping jewelry is a choice with costs and consequences, not mere lack of action.
Conclusion: The Travel of the Moneyed Heart
Knowing the behavioral economics of selling fine jewelry doesn’t make it emotionally easy, but at least puts events in perspective. Knowing that your reluctance grows from predictable psychological biases, not rational valuations, doesn’t make selling pain-free — but it does clarify that these feelings, while real, don’t have to determine decisions.
The aim… isn’t to turn into emotionless economic robots, coldly optimizing for every decision in isolation from meaning or attachment. Rather, it’s to acknowledge when psychological biases may lead us toward decisions that don’t align with our true values and circumstances. For sentimentally precious jewelry, however, it’s often completely rational to want to keep something even though it may be financially suboptimal. “But not parting with jewelry due to the sunk cost fallacy, loss aversion or status quo bias—while truly needing or wanting to sell—is letting predictable psychological quirks get in the way of good judgment.
Using such relationships (with people who are sensitive to these emotional forces) allows you to bridge the divide between psychology and market reality, thus creating a space for decision-making where one can pay homage both to the truth of one’s feelings and the rationality of economic principals.” The emotional process of saying goodbye to luxury is never going to be seamless, but it’s a lot less difficult when you can simply sidestep the emotion by looking inside its behavioral economics engine — and make decisions you feel good about in the short- and long-term — which may just be the best cause-effect outcome behavioral economics has ever given us.
