Testing the Endowment effect: Willingness to trade
The endowment effect, also known as "status quo bias", was developed by economist Richard Thaler. The theory states that a person will value a particular possession more if he or she owns it. The owner of the possession will do more to avoid losing the possession than he or she would to gain it. This theory also suggests that the owner of a possession will attribute a higher value to the possession than an equivalent possession that they do not own. The endowment effect has been extensively studied as it relates to economic theory. It helps explain concepts, such as why human beings behave irrationally in situations of "sunk costs".