Economics Endowment Effect Questions
The endowment effect influences consumer behavior by causing individuals to place a higher value on items they already possess compared to identical items they do not own. This bias leads to a reluctance to part with possessions and a tendency to overvalue them, resulting in higher prices individuals are willing to pay to acquire the same item they already possess. Additionally, the endowment effect can lead to a resistance to change and a preference for the status quo, as individuals perceive the loss of their possessions as more significant than the potential gain from acquiring new ones.