Economics Cognitive Biases Questions
The endowment effect refers to the tendency of individuals to value an item or good more highly simply because they own it or possess it. It influences economic choices by causing individuals to place a higher value on items they already possess compared to identical items they do not own. This bias can lead to irrational decision-making, such as individuals being unwilling to sell an item for its market value or being unwilling to pay a fair price for an item they desire.