Behavioural Finance

Endowment Effect

Definition

What is Endowment Effect?

Valuing an owned asset more highly simply because it is owned.

Example in practice

A shareholder demands more to sell than they would pay to buy the same share.

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The tendency to feel losses more strongly than equivalent gains.

The tendency to overestimate one's knowledge, forecasting ability, or control.

The tendency to seek or interpret information that supports an existing belief.

Incorporating environmental, social, and governance factors into investment analysis or ownership.

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