Endowment Bias

Question 1

A wise man should have money in his head, but not in his heart.

Answer 1

Jonathan Swift

Question 2

People who exhibit ______________ value an asset more when they hold property rights to it than when they don’t.

Answer 2

Endowment Bias

Question 3

inconsistent with standard economic theory, which asserts that a person’s willingness to pay for a good or an object should always equal the person’s willingness to accept the dispossession of the good or the object.

Answer 3

Endowment Bias

Question 4

SUBJECT TO SUFFER FROM ENDOWMENT BIAS

Answer 4

Older People / Sentimental Person
Celebrity
Collectors
Investor

Question 5

Generally, endowment bias tends to impact investors in two main contexts:

Answer 5

(1) inherited securities
(2) purchased securities

Question 6

IMPLICATIONS TO INVESTOR

Answer 6

First, investors may hold onto securities that they already own.

Second, investors hold onto securities because of familiarity.