Which of the Following Defines or Describes the Endowment Effect

question 83

Multiple Choice

Which of the following defines or describes the endowment effect?

• A) The act of owning a good increases its value, so the owner must be paid more to give up the good than she would have been willing to pay for it in the first place.
• B) It is a way to frame a bias in which people treat their current and future assets as separable, nontransferable accounts; for example, having mental savings accounts for entertainment, retirement, and other expenditures.
• C) It is the mistake of allowing costs that cannot be recovered to affect decisions.
• D) It is the act of placing too much emphasis on the immediate present than even the near future when making decisions.

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Definitions:

Preoperational Thinking

A stage in Piaget's theory of cognitive development, where children ages 2 to 7 engage in symbolic play and struggle with logic and taking the perspective of others.

Inability to Conserve

A cognitive limitation observed in children, indicating their failure to understand that quantity remains the same despite changes in its shape or form.

Gross Motor Milestones

Developmental milestones that involve the large muscles of the body, enabling activities like crawling, walking, jumping, and throwing.