Knowledge Tree
endowment effect
Also known as: Endowment Effects
Facts (10)
Sources
Biases in Behavioral Finance - World Scholars Review worldscholarsreview.org Sep 15, 2024 9 facts
claimEmotional biases, such as herding bias, loss aversion, house money effect, mental accounting, recency bias, regret aversion bias, framing effect, hindsight bias, representative bias, and the endowment effect, are driven by feelings and emotions.
claimThe endowment effect causes investors to overvalue their owned assets, according to Patel & Chen (2023).
claimArmansyah (2022) failed to find evidence of the endowment effect influencing investment decisions in an analysis of 205 individual Indonesian capital market investors, attributing this to the tendency of capital market investors to prioritize substantial economic factors.
claimCarkey et al. (2022) found that the endowment effect inhibits the demand for loans collateralized by a borrower's existing assets compared to using the asset to be acquired as collateral.
claimThe endowment effect is a cognitive bias where individuals tend to value objects they own more highly than objects they do not own, often due to emotional attachment.
referenceGine and Goldberg (2018) authored the World Bank Policy Research Working Paper No. 8576, 'Endowment Effects and Usage of Financial Products: Field Evidence from Malawi', which provides field evidence on how endowment effects influence the usage of financial products.
referenceK. Carney and M. O'Brien published a 2022 National Bureau of Economic Research paper titled 'The Endowment Effect and Collateralized Loans,' which examines the endowment effect in the context of collateralized loans.
claimPan (2023) identified that the endowment effect has a significant influence on the behavior of Indian investors and can lead to negative consequences in the investment field in Nagpur city.
referenceMcGranaghan and Otto (2022) examined the relationship between choice uncertainty and the endowment effect.
Psychology Of Financial Decision-Making - Meegle meegle.com 1 fact
claimRichard Thaler expanded the field of behavioral finance by exploring concepts such as mental accounting and the endowment effect, work for which he was awarded the Nobel Prize in Economic Sciences.