Lamont has a 42-inch high definition television that he purchased for $1200 six months ago. He's decided to replace it with a larger 60-inch television, and tries to sell the smaller one for $1100. He finds that nobody will buy it, and tells prospective buyers, "it is almost brand new and I'm selling it for less than it cost when I bought it!" Lamont fails to recognize that the same televisions can now be purchased for $800, and he is inflating the value of his television just because he owns it. This is called the

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The endowment effect describes a cognitive bias where people ascribe more value to things merely because they own them. Lamont's overvaluation of his television, despite its market price having decreased, is a classic example of this effect.

Lamont Has a 42-Inch High Definition Television That He Purchased