Economics Prospect Theory Questions
The endowment effect in Prospect Theory refers to the tendency of individuals to value an item or asset more highly simply because they own it or possess it. This means that people often place a higher value on something they already have compared to its objective market value or what they would be willing to pay to acquire it. The endowment effect can lead to irrational decision-making and can influence individuals to hold onto their possessions even when it may not be economically rational to do so.