Endowment Effect Strategy🤯 #psychology #finance #education

🔸 Endowment Effect theory is a well-known concept in the world of Behavioural Finance. Endowment Effect says that we tend to value thing more just because we own it. However we don’t value things more in pricing terms if we don’t own it.

🔸 Endowment Effect also says that we tend to love what we have already and if someday we need to change it, it’s not easy for us. We resist it a lot. So final one line conclusion is “If I own it, it’s good and it’s valuable and if I don’t own it, I am not sure, maybe it’s not worth!”

➡️To explain it other simple words; How much money do you expect for your mobile phone, if you wanted to sell it? And then think how much money would you like to pay to someone if you wanted to buy it?

In most of the cases, one wants a higher price when he wants to sell and wants to get the same thing for lower price. There is nothing wrong in this as we all are human and we will think from money point of view. But take the underlying learning from here. If a person has something, he treats it very special and does not think rationally at times and it affects him a lot in his financial life.

Source: JaagoInvestor
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