Barb and Ken purchased a house for $300,000 in 2005. When they needed to sell because of a job transfer in 2009, the house was appraised for $250,000 but they put it on the market for $300,000 anyway. The house is still on the market. Behavioral tendencies at work here may include

Question

Quizplus · Accepted Answer

Barb and Ken's decision to list their house at the original purchase price despite its lower appraisal value is indicative of loss aversion, where they are trying to avoid realizing a financial loss. Additionally, anchoring is at play here as they are fixated on the original purchase price of $300,000 as a reference point for their selling price, disregarding the current market appraisal.

Barb and Ken Purchased a House for $300,000 in 2005