What Is the Endowment Effect

question 96

Multiple Choice

What is the endowment effect?

• A) Children who receive a large inheritance are less likely to work.
• B) The more you have of something, the more you want to get rid of it.
• C) The fact of owning a good makes it more valuable.
• D) Colleges with large endowments give student aid more generously.

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Definitions:

Consumer Transactions

The purchase and sale of goods or services between a buyer, typically an individual or household, and a seller for personal use.

Consideration

In contract law, it refers to something of value exchanged by the parties involved that induces them to enter into the agreement.

Personal Defense

Strategies, methods, or actions employed by an individual to protect themselves from harm.

HDC

Stands for Holder in Due Course, a term in commercial law referring to a party who acquires a negotiable instrument in good faith and for value, thus having certain protections.