In negotiation,buyers and sellers may adopt differing bargaining positions for an object,but their private valuations for the object should not differ as a consequence of who has possession.The endowment effect is best described as:
A)the difference between what sellers demand and what buyers are willing to pay
B)a tendency for people to value an object more once they own it
C)the intrinsic value we associate with a certain outcome
D)saving money instead of purchasing goods

Question

Quizplus · Accepted Answer

The endowment effect is the tendency for people to value an object more once they own it. This means that the private valuations of buyers and sellers should not differ based on who currently possesses the object. Option A is incorrect as it describes the gap between seller demand and buyer willingness to pay, which is not related to the endowment effect. Option C is incorrect as it refers to the intrinsic value of an outcome, which is not specific to negotiations or valuations of objects. Option D is unrelated to the endowment effect and negotiation.

In Negotiation,buyers and Sellers May Adopt Differing Bargaining Positions for an Object,but