The Endowment Effect Is the Tendency

question 3

Multiple Choice

The endowment effect is the tendency:

• A) to place a higher value on something a person already owns simply because they own it.
• B) to have a harder time parting with wealth people have held the longer the amount of time they hold it.
• C) for a person to believe they hold a particular skill because someone told them they do.
• D) for people to want to bestow their own beliefs on others when making decisions.

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Definitions:

Empirical Investigation

The process of collecting and analyzing data to obtain evidence that can confirm or refute a hypothesis, theory, or observation.

Optimal Choices

Optimal choices refer to decision-making that maximizes utility or benefit within given constraints, finding the best possible outcome from a set of alternatives.

Scarcity

The basic economic issue arises from the reality of endless human desires facing the constraint of finite resources.

Normative

Pertaining to or expressing judgments based on values, standards, or ideals, often concerning what is right or wrong, or what ought to be.