Which of the following defines or describes the endowment effect?
A) The act of owning a good increases its value, so the owner must be paid more to give up the good than she would have been willing to pay for it in the first place.
B) It is a way to frame a bias in which people treat their current and future assets as separable, nontransferable accounts; for example, having mental savings accounts for entertainment, retirement, and other expenditures.
C) It is the mistake of allowing costs that cannot be recovered to affect decisions.
D) It is the act of placing too much emphasis on the immediate present than even the near future when making decisions.

Question

Quizplus · Accepted Answer

The endowment effect is described as the phenomenon where individuals value an owned item more than they would if they did not own it, leading them to require a higher price to part with the item than they would be willing to pay to acquire it if they did not own it.

Which of the Following Defines or Describes the Endowment Effect