The endowment effect suggests that that people
A)have a strong attachment to their entitlement, regardless of whether they paid to acquire it.
B)have a strong sense of fairness.
C)are concerned about the welfare of others.
D)act in ways to distort market prices.

Question

Quizplus · Accepted Answer

The endowment effect refers to people's tendency to overvalue items and goods they possess, regardless of their objective value or whether they paid for them. This suggests that people have a strong attachment to their entitlements, which leads them to be reluctant to give them up or part with them, even if they are offered a fair price or an alternative. This effect can lead to market inefficiencies and distortions, as people may demand higher prices or undervalue trade-offs.

The Endowment Effect Suggests That That People