Lucky buys hats for $20 but Lucky will not sell one of her hats for less than $35. Lucky is ________.
A) displaying the endowment effect
B) making decisions using her prefrontal cortex
C) exhibiting bounded self-interest
D) showing unbounded will power

Question

Quizplus · Accepted Answer

Lucky's unwillingness to sell a hat for less than $35 indicates that she values the hat more than the price she paid for it, which is characteristic of the endowment effect. This effect refers to people's tendency to overvalue objects they own or possess, leading them to demand a higher price to relinquish them. The other options do not explain Lucky's behavior as well.

Lucky Buys Hats for $20 but Lucky Will Not Sell