What Is the Best Definition of Endowment Effect

question 63

Multiple Choice

What is the best definition of endowment effect?

• A) The tendency to focus on avoiding short-term losses, even at the expense of long-term gains.
• B) The tendency to avoid making a decision because you fear that the decision would have been less than optimal.
• C) The tendency to consider something that you own to be worth more than it would be if you did not own it.
• D) Confusion between real buying power and nominal buying power.
• E) The reliance on instinct instead of analysis in making decisions.

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Definitions:

Model Significant

A measure of the likelihood that the relationships observed in the data occur due to something other than chance.

Correlation Coefficient

A metric that evaluates how closely related the movements of two variables are.

Linear Relationship

A relationship between two variables where a change in one variable is associated with a proportional change in the other variable, often represented by a straight line when graphed.

Regression Analysis

A statistical process for estimating the relationships among variables.