What Is the Endowment Effect

question 263

Multiple Choice

What is the endowment effect?

• A)the phenomenon that economic agents are endowed with different qualities and abilities so that trade among individuals increase efficiency
• B)the tendency for economic agents with abundant resources to consume a proportionately greater quantity of goods and services
• C)the tendency of people to be unwilling to sell something they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it.
• D)the tendency of firms to use celebrities endowed with good looks to promote their products

---

Definitions:

Population Parameter

A value that represents a characteristic of an entire population, such as its mean or standard deviation.

Random Sample

A subset of individuals chosen from a larger set, where each member has an equal chance of being selected, ensuring unbiased representation.

Confidence Interval

A range of values, derived from the sample statistics, that is believed to contain the true population parameter with a certain probability.

Standard Deviation

A quantitative assessment of how much data points diverge from the average value in a series.