New research on 'endowment effect' points to evolutionary roots of cognitive biases

New research may explain why we sometimes overvalue items we've acquired—to an irrational degree—irrespective of their market or sentimental value. This phenomenon is called the endowment effect, and researchers have long puzzled over why it occurs, and why the size of the effect can vary so much across items when it does. It's important to understand, however, because the endowment effect can lead us to make unpredictable economic decisions, and it has far-reaching implications throughout law, markets and business.

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