If You Exhibit the Endowment Effect as a Decision Maker

question 21

Multiple Choice

If you exhibit the endowment effect as a decision maker, then you are

• A)deciding on the basis of sunk costs.
• B)buying something you cannot really afford because you expect to save in the future.
• C)ignoring non-monetary opportunity costs.
• D)consuming based on celebrity endorsements.

---

Definitions:

Anticipated Losses

Expected financial deficits that are predicted based on current circumstances or activities.

Completed Contract

An accounting method where revenue and income are recognized only after a contract is finished or the work is completely done.

Percentage Of Completion

An accounting method used to recognize revenue and expenses of long-term contracts proportionally as the contract progresses toward completion.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.