Economics Endowment Effect Questions
The endowment effect affects decision-making in the art market by causing individuals to place a higher value on an artwork simply because they own it. This bias leads to a reluctance to sell the artwork at a price lower than their perceived value, resulting in higher asking prices and potentially hindering market efficiency. Additionally, the endowment effect can make buyers less willing to pay the true market value for an artwork, as they may feel a sense of loss if they have to pay more than what they believe it is worth. Overall, the endowment effect in the art market can distort pricing and limit the number of transactions, impacting market dynamics.