Kate is attempting to sell her house for $260,000. Fred lives across the street in an identical house. Fred recently stated to his wife that Kate's house is probably worth only $250,000 but that once
She sells her house, he would like to put their house on the market at $285,000 and then move into
A condominium. Which one of the following behaviors applies to Fred?

Question

Quizplus · Accepted Answer

Fred's behavior reflects the endowment effect, where he values his own house more highly than an identical house across the street, simply because it is his.

Kate Is Attempting to Sell Her House for $260,000