Asked by Melissa Wilkerson on Jul 01, 2024
Verified
Rosa received a corgi pillow as a raffle prize; she would have been willing to pay $18 to buy it herself. Based on the endowment effect, we would expect Rosa to be willing to sell the pillow
A) for some amount less than $18.
B) only if she is offered more than $18.
C) for the $18 she would have been willing to pay for the pillow.
D) under no circumstances whatsoever.
Endowment Effect
The phenomenon where people ascribe more value to things merely because they own them, often leading to a discrepancy between buying and selling prices.
Raffle Prize
A reward given to the winner(s) of a raffle, which is a form of lottery or contest.
- Grasp how perceptions of fairness and the endowment effect influence economic decisions.
Verified Answer
BH
Becky Hernandez7 days ago
Final Answer :
B
Explanation :
The endowment effect suggests that once an individual owns an item, they value it more than they did before owning it. Therefore, Rosa would likely require an offer greater than $18 to part with the corgi pillow.
Learning Objectives
- Grasp how perceptions of fairness and the endowment effect influence economic decisions.