Economics Asked by user3095420 on July 18, 2021
Given the situation below, can someone help me identify/name the logical phenomenon?
So I own a laptop that I don’t use…. Someone has offered me £1000 dollars for it but I decided not to sell it. I myself would NOT pay £1000 dollars for it… I feel like there’s some kind of illogical behaviour going on here because me not selling it for £1000 is financially equivalent to me buying it for $1000. I think in both cases I’m giving up £1000 for a laptop. Do you guys know if there a word/name for this?
WTP-WTA gap/discrepancy/disparity. (WTP = Willingness-to-pay, WTA = Willingness-to-accept.)
(There's a fairly large literature on this. Search "WTA WTP" on Google or Google Scholar and you'll find many papers.)
Answered by user18 on July 18, 2021
The discrepancy between WTP and WTA is known as the endowment effect, and this has been extensively studied in behavioral economics.
Answered by Herr K. on July 18, 2021
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