Which term describes the tendency to require more compensation to give up an object than to acquire it?

• A. Endowment Effect
• B. Loss Aversion
• C. Confirmation Bias
• D. Negativity Bias

Answer: (A)

Ownership increases the subjective value of an object, producing the endowment effect: people require more compensation to give up something they own than they would pay to acquire the same item. This shows up as a higher willingness to accept (WTA) price than willingness to pay (WTP). Classic experiments with coffee mugs and other everyday items demonstrate how simply owning an item shifts its value, making selling prices higher than buying prices. The endowment effect is related to loss aversion but is specifically about ownership altering valuation, rather than a general tendency to fear losses more than gains. It’s not about looking for negative information or filtering beliefs, which are other biases.