Endowment effect affects valuations from "summary" of Thinking, Fast and Slow... in 30 Minutes by 30 Minute Expert Summary Staff
The Endowment Effect is a phenomenon where people tend to place a higher value on items they own compared to identical items they do not own. This cognitive bias can impact how individuals make decisions and evaluate the worth of possessions. When someone already owns something, they become emotionally attached to it, leading them to overvalue it. This can create a distorted perception of value, as individuals may be unwilling to part with their possessions unless they receive a significantly higher price than what they initially paid. This effect can influence various aspects of decision-making, including buying and selling goods, negotiating prices, and making trade-offs. For example, if someone is trying to sell a used car, they may set the price higher than the market value because they believe their car is worth more to them personally. Conversely, if someone is considering purchasing a similar car from a dealer, they may perceive the price as too high because they do not have the same attachme...
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