Endowment Effect

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An Endowment Effect is a Behavioral Economics that ...



References

2015

  • (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/endowment_effect Retrieved:2015-7-6.
    • In behavioral economics, the endowment effect (also known as divestiture aversion) is the hypothesis that people ascribe more value to things merely because they own them. This is illustrated by the observation that people will tend to pay more to retain something they own than to obtain something owned by someone else — even when there is no cause for attachment, or even if the item was only obtained minutes ago.

      The endowment effect can be equated to the behavioural model Willingness to Accept or Pay (WTAP), a formula sometimes used to find out how much a consumer or person is willing to put up with or lose for different outcomes.