What Is an Example of an Endowment Effect

question 43

Multiple Choice

What is an example of an endowment effect?

• A) Riku paid $3,100 for a used car that he values at $4,000. Recently, Riku was offered $4,400 for the car but refuses to sell it.
• B) Haru receives increasing marginal utility as his 401K plan increases.
• C) Hana prefers a guaranteed $200 to a gamble with an expected value of $200.
• D) Akari refuses to transfer money from her checking account into her savings account, even though she has paid all her monthly bills.

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Definitions:

Future Events

Occurrences or happenings that are yet to take place, often the subject of predictions or anticipations.

Disasters

Events that cause significant harm, destruction, or death to a large number of people, often resulting from natural phenomena or human actions.

Perceived Control

An individual's belief in their ability to influence events and outcomes in their own lives.

Commercial Air Flights

Flights operated by airlines for the purpose of transporting passengers or cargo as a business.