Mia recently bought a kayak for $700 that she values at $1,000. Mia's friend, Sofia, offered to buy the kayak from her for $1,000, but Mia turned her down. Mia is most likely encountering _____.
A) sunk cost fallacy
B) time inconsistency
C) falling prey to framing effects, particularly anchoring
D) the endowment effect

Question

Quizplus · Accepted Answer

Mia's refusal to sell the kayak, despite being offered the amount she values it at, is an example of the endowment effect. This psychological phenomenon occurs when people ascribe more value to things merely because they own them.

Mia Recently Bought a Kayak for $700 That She Values