28-endowment-effect.yml

id: endowment-effect
name: Endowment Effect
oneliner: >
  We tend to value things we own higher than we would if we didn't own them.
description: >
  The Endowment Effect is a cognitive bias that causes people to ascribe more
  value to things merely because they own them. This effect suggests that people
  are more likely to retain an object they own than acquire that same object
  when they do not own it. This bias can lead to irrational decision-making in
  various contexts, from personal possessions to financial investments, where
  owners overvalue what they own and demand more to give them up than they would
  be willing to pay to acquire them if they did not own them.
examples:
  - >
    A person might refuse to sell a family heirloom at market price, valuing it
    more due to its personal significance and ownership history.
  - >
    Investors might hold on to stocks or real estate longer than rational
    analysis would suggest, simply because they own these assets and overvalue
    them compared to if they were potential buyers.
wikipedia: https://en.wikipedia.org/wiki/Endowment_effect
categories:
  - biases