Economics Endowment Effect Questions
The endowment effect refers to the tendency of individuals to value an item more highly simply because they own it. Self-identity plays a significant role in this phenomenon. When individuals possess an item, they often develop a sense of ownership and attachment to it, which becomes intertwined with their self-identity. This attachment leads to an overvaluation of the item, as individuals perceive it as an extension of themselves. Consequently, they are less willing to part with the item and require a higher price to sell it compared to what they would be willing to pay to acquire the same item. Self-identity influences the endowment effect by shaping individuals' emotional connection to their possessions and their perception of their own worth.