What is the best deﬁnition of endowment effect?
A) The tendency to focus on avoiding short-term losses, even at the expense of long-term gains.
B) The tendency to avoid making a decision because you fear that the decision would have been less than optimal.
C) The tendency to consider something that you own to be worth more than it would be if you did not own it.
D) Confusion between real buying power and nominal buying power.
E) The reliance on instinct instead of analysis in making decisions.

Question

Quizplus · Accepted Answer

The endowment effect refers to the tendency for people to place a higher value on something they own compared to the value they would place on the same thing if they did not own it. This can affect their behavior in decision making, such as being reluctant to sell something for less than it is truly worth to them.

What Is the Best Deﬁnition of Endowment Effect