What is an example of an endowment effect?
A) Riku paid $3,100 for a used car that he values at $4,000. Recently, Riku was offered $4,400 for the car but refuses to sell it.
B) Haru receives increasing marginal utility as his 401K plan increases.
C) Hana prefers a guaranteed $200 to a gamble with an expected value of $200.
D) Akari refuses to transfer money from her checking account into her savings account, even though she has paid all her monthly bills.

Question

Quizplus · Accepted Answer

The endowment effect is a cognitive bias where people value an owned object higher than its market value simply because they own it. Riku's refusal to sell the car for more than he values it, despite the offer being higher than his valuation, is an example of the endowment effect.

What Is an Example of an Endowment Effect