What is the endowment effect?
A)the tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than what they would be willing to pay to buy the good if they did not already own it
B)the tendency of people to be unwilling to sell something they already own because of its sentimental value
C)the tendency of people to overstate the value of a good they already own even though similar items can be purchased at a lower price
D)the sum total of assets that a person has acquired over the years

Question

Quizplus · Accepted Answer

The endowment effect refers to the tendency for individuals to value an item they already own more than they would if they did not own it. This can lead to a reluctance to sell the item, even if the price being offered is higher than what they would be willing to pay to buy the item if they didn't already own it. Option B refers to sentimental attachment, which may contribute to the endowment effect but is not the same thing. Option C refers to a related bias called the "status quo bias" or "anchoring effect," but not the endowment effect. Option D is irrelevant to the endowment effect.

What Is the Endowment Effect