Ryan Wisneski Eco 3933 January 19, 2011 The Endowment Effect, although many argue has no place in individuals’ financial decision making, is a very present factor with regards to investing. When individuals take their time, carefully researching and planning what stock to invest in and how much of their money to put in to a certain stock they become attached to the stock of their choosing once they purchase it. Although this action to value something are higher because it is yours is irrational this does not stop people from acting on this feeling. When it comes time to sell the stock owners now take into account subconsciously, all the work that had been done and the longevity for which they owned the stock to come up with an inflated number that they think it is worth, which usually beyond what people are willing to pay. A great example of this comes from Predictably Irrational when we look at the system Duke University uses to issue basketball tickets. Students must camp out days in advance and remain on site to check in at random intervals so that they
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This note was uploaded on 02/19/2011 for the course ECO 3933 taught by Professor Hamman during the Spring '11 term at FSU.