Endowment Effect

The endowment effect is a result in behavioral economical that people are more likely to retain an object they own than acquire that same object when they do not own it. It is a cognitive distortion in which the perceived value of an asset is biased by the act of owning it and ties into the psychological phenomenon of loss aversion. Instead of objectively valuing the asset, independent of their holdings, the individual will overvalue assets they currently hold.


  1. Plott, Charles R., and Kathryn Zeiler. "Exchange asymmetries incorrectly interpreted as evidence of endowment effect theory and prospect theory?." American Economic Review 97, no. 4 (2007): 1449-1466.
  2. Leibenstein, Harvey. "Bandwagon, snob, and Veblen effects in the theory of consumers' demand." The quarterly journal of economics 64, no. 2 (1950): 183-207.