Suppose Your Instructor Gave Hats with Your School's Logo to Half

question 71

Multiple Choice

Suppose your instructor gave hats with your school's logo to half of your economics classmates. She then asked these students to value the hats, and the average response was $9 per hat. Under the endowment effect, we should expect that the average value assigned by the economics students who did NOT receive the hats to be:

• A) higher.
• B) lower.
• C) the same.
• D) We cannot answer this question without knowing more about the risk preferences of the students.