Endowment Effect  Definition: Endowment Effect  Originally
coined by economist Richard Thaler, the endowment effect
hypothesizes that people overvalue what they possess. Once an
item has been acquired, its owner considers it more valuable
than it actually is because they've established a sense of
ownership. In one experiment, Thaler found that people demanded
$7 for a mug that had been given to them but would only pay $3
to buy a mug from someone else.  We can find evidence of the
theory in our everyday lives. Some of the extremely high
starting bids on eBay auctions is one place I can definitely see
the effect in action. Where else can you find it?   Send
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