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Cognitive Biases and How They Can Hurt Timeshare Owners

Cognitive biases are common mental shortcuts that we all rely on to make quick decisions in our daily lives. However, certain biases like anchoring bias and confirmation bias can have harmful effects on timeshare owners. This summary of my original article from ResortTrades emphasizes the influence of these biases on timeshare resales, rentals, and how they could affect the financial health of timeshare owners.

Mike Kennedy - May 19, 2023

KOALA’s mission is to empower and educate timeshare owners. By understanding these biases, timeshare owners can make more informed choices that truly protect them from misinformation and those looking to exploit it.  

Anchoring Bias

Anchoring bias can influence timeshare owners by leading them to cling to outdated perceptions of their timeshare’s value or potentially price of their personal costs, like maintenance fees. regardless of market conditions. Despite a timeshare’s near immediate financial depreciation, owners often hold unrealistic expectations based on the initial purchase price. This seriously hinders their ability to adapt and make informed decisions. This also often prevents them from selling at a loss and may continue to hold on to (and pay fees for) a timeshare way past the points of it delivering any value. Unrealistic rental rates anchored to their own fixed costs could cause owners to lose any financial gain whatsoever. It’s important to set the price of your timeshare rental to the market – not your own expectations or needs. If you don’t, you will very likely end up with a big ‘ol goose egg in one hand and a bill for your maintenance fees in the other. 

Confirmation Bias

Confirmation bias shapes the decisions of timeshare owners by causing them to seek information that aligns with their existing beliefs. This bias makes owners susceptible to scams and misleading promises from timeshare rental, resale, and exit companies. Sadly, falling victim to these timeshare scams can worsen financial burdens that led many owner to those companies to begin with. These scams also continue to erode trust within the industry and worsen the owner’s ability to find reliable resources – the cycle continues. 

Timeshare owners should always conduct thorough research to determine the true financial value of their timeshare weeks or points (whether rental or resale) and exercise caution when engaging with any company offering something too-good-to-be-true. 

While awareness of these biases is crucial, it is equally important for the timeshare industry to address the liquidity issues that owners often face. This creates opportunities for biases (and charlatans) to lead owners down these dangerous paths. We industry folks must do more to educate owners while offering better and more reliable ways to temporarily defray costs or easily exit a timeshare without serious financial loss or risk.

Read the full article here on ResortTrades.

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