Rosa received a corgi pillow as a raffle prize; she would have been willing to pay $20 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 $20.
B) only if she is offered more than $20.
C) for the $20 she would have been willing to pay for the pillow.
D) under no circumstances whatsoever.

Question

Altynay Alibekova · Accepted Answer

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 $20 to part with the corgi pillow, as she now places a higher value on it due to her ownership.

Definitions

Learning Objectives

Learning Objectives

Related questions