Term of the Day: Endowment Effect

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	INVESTOPEDIA Term Of The Day September 13, 2015 Endowment Effect In behavioral finance, the endowment effect describes a circumstance in which an individual values something which they already own more than something which they do not yet own. Sometimes referred to as divestiture aversion, the perceived greater value occurs merely because the individual possesses the object in question. Investors, therefore, tend to stick with certain assets because of familiarity & comfort, even if they are inappropriate or become unprofitable. The endowment effect is an example of an emotional bias. Breaking It Down: Studies have shown repeatedly that people will value something that they already own more than a... Read More Related to "Endowment Effect" Behavioral Bias - Cognitive Vs. Emotional Bias In Investing Everybody has biases. We make judgments about people, opportunities, Washington policies and... Read More Is Biased Investing Holding You Back? Excessive caution can result in investors avoiding potentially profitable foreign assets. This "home bias" can cost... Read More Pros and Cons of Capitalist vs Socialist Economies Capitalism and socialism are economic systems that countries use to manage their economic resources and... Read More Recently Added Definitions Zero-Sum Game Zero-sum is a situation in game theory in which one person's gain is equivalent to another's loss... Read More Theta A measure of the rate of decline in the value of an option due to the passage of time. Theta can also be... Read More Related Definitions Middle Market Internal Rate Of Return - IRR Financial Singularity Surplus Discount Bond Past Terms of the Day Halo Effect J-Curve Effect Wal-Mart Effect Fisher Effect Draghi Effect You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe | Unsubscribe From All | Manage Profile Investopedia US, A Division of IAC. Copyright © 2015, Investopedia, LLC. All Rights Reserved Follow Us: