Asked by Shane 2Wavyy on Jul 26, 2024
Verified
In the classroom mug experiment, students receive the mug for free and are willing to sell it:
A) for less than it's perceived market value, since it was free in the first place.
B) for exactly the perceived market value, without enjoying a gain or suffering a loss.
C) only for more than its perceived market value; otherwise it would create a perceived loss.
D) for any amount the buyer would offer, since it was free in the first place.
Perceived Market Value
The value that consumers believe a product or service is worth, which may differ from its actual market price or cost of production.
Perceived Loss
The sensation or assessment of loss experienced by an individual, even in situations where there might not be a tangible or actual loss.
- Comprehend the empirical data underpinning behavioral economic models, including studies like the classroom mug experiments.
Verified Answer
MS
Melissa SearsJul 27, 2024
Final Answer :
C
Explanation :
This phenomenon is explained by the endowment effect, where individuals value an item more once they own it, often requiring a higher price to sell it than the price they would be willing to pay to buy it, even if they received the item for free.
Learning Objectives
- Comprehend the empirical data underpinning behavioral economic models, including studies like the classroom mug experiments.