Economics Endowment Effect Questions Medium
The Endowment Effect in economics refers to the tendency of individuals to value an item or good more highly simply because they own it or possess it. It suggests that people tend to place a higher value on items they already possess compared to the value they would place on the same item if they did not own it. This effect can lead to irrational behavior in economic decision-making, as individuals may be unwilling to sell or trade their possessions unless they are offered a price significantly higher than what they would be willing to pay to acquire the same item. The Endowment Effect has important implications for various economic phenomena, such as consumer behavior, market efficiency, and the formation of prices.