What Is the Endowment Effect

question 107

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 increases efficiency.
• B) The tendency for economic agents with abundant resources to consume a proportionately greater quantity of goods and services.
• C) The tendency for 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.

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Definitions:

Phallic Stage

A phase in Freudian psychosexual development during which a child's focus of libido is on the genital area.

Latency Stage

A phase in Freud's psychosexual stages of development where sexual feelings are inactive or dormant.

Oral Stage

A phase in Freudian psychosexual development where an infant's pleasure centers are in the mouth, leading to behaviors such as sucking and biting.

Executive Part

The component of the brain, particularly associated with the frontal lobes, responsible for decision-making, problem-solving, and regulating behavior.