Application of Endowment Effect in Housing and Financial Markets

Zihang Zeng

2025

Abstract

Endowment effect refers to people assigning higher values to items they own compared to those they do not own. People are influenced by the endowment effect when they overvalue their belongings, which makes them reluctant to sell or trade them. People may demand greater prices than what is deemed to be fair market value as a result of this bias, which can lead to less-than-ideal decisions. Consumer behaviour and negotiating tactics are also impacted. Development of the concept by Thaler, Kahneman and Knetsch hinges largely on the excessive emotional value attached to losses compared to gains, and together they form a wider part of the alternative behavioural theory of consumer behaviour challenging standard economic theories. Through analysis of past experimental and observational research, this paper investigates the presence and impact of the endowment effect on housing markets and investment behaviours by focusing on the gap between WTA and WTP, coefficient on loss and impact of real-estate agents in housing; and how endowment effect causes disposition effect and familiarity bias in investment behaviours.

Paper Citation

in Harvard Style

Zeng Z. (2025). Application of Endowment Effect in Housing and Financial Markets. In Proceedings of the 2nd International Conference on Applied Psychology and Marketing Management - Volume 1: APMM; ISBN 978-989-758-791-7, SciTePress, pages 640-644. DOI: 10.5220/0014149900004942

in Bibtex Style

@conference{apmm25,
author={Zihang Zeng},
title={Application of Endowment Effect in Housing and Financial Markets},
booktitle={Proceedings of the 2nd International Conference on Applied Psychology and Marketing Management - Volume 1: APMM},
year={2025},
pages={640-644},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0014149900004942},
isbn={978-989-758-791-7},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 2nd International Conference on Applied Psychology and Marketing Management - Volume 1: APMM
TI - Application of Endowment Effect in Housing and Financial Markets
SN - 978-989-758-791-7
AU - Zeng Z.
PY - 2025
SP - 640
EP - 644
DO - 10.5220/0014149900004942
PB - SciTePress