Jim, an avid biker, breaks his leg and will never be able to bike again. An acquaintance offers to buy the bike for $100, but Jim refuses to sell it, insisting it is worth more. A year later, someone offers to buy the bike for $75, but Jim still refuses to sell it. Jim's behavior could be explained by:

Question

Quizplus · Accepted Answer

Jim's refusal to sell the bike despite not being able to use it anymore and receiving reasonable offers can be explained by the endowment effect. This psychological phenomenon occurs when people value something they own more highly simply because they own it, leading them to demand a higher price than they would be willing to pay if they didn't own it.

Jim, an Avid Biker, Breaks His Leg and Will Never