A local government is considering replacing a public park with a new administrative building and decides to survey the city's residents. The citizens are asked how much they would be willing to pay in increased taxes to keep the public park and also how much they would be willing to receive in a tax refund in order to accept the destruction of the park. The citizens report that they would be willing to pay on average $25 each to keep the public park, but they would need to receive on average $50 in a tax refund to accept the destruction of the park. This illustrates: A)negative framing. B)the endowment effect. C)loss aversion. D)status quo bias.

Question

Quizplus · Accepted Answer

Loss aversion is the tendency for people to feel the pain of a loss more strongly than the pleasure of an equivalent gain. In this case, the citizens are more willing to pay to keep the park than they are to receive a tax refund in exchange for its destruction. This is because they feel the loss of the park more strongly than they would feel the gain of the tax refund.

A Local Government Is Considering Replacing a Public Park with a New