What is the effect of the foundation?

The effect of the foundation is the cognitive bias that was first hypothetized by economist Richard Thaler. According to Thaler's theory, people appreciate the object more if their ownership is clearly determined. The results of the foundation effect can sometimes be quite interesting and be aware of the effect of the foundation can be very important, whether you buy or sell something.

Many studies have been conducted to explore the endowment effect. In a classic study, people were asked to assess the value of the cups of coffee they were given to them. Another group in the study was also asked to estimate the value of coffee cups, but these cups of coffee were more general than to be owned by subjects. Subjects that owned their cups of coffee were constantly weighed higher than other objects, and in some cases stated that they would rather keep their cups of coffee rather than sell them.

This effect seems specifically to objects. When people in Similarly AR were offered tokens that could be exchanged for cupsCoffee, the effect of the foundation has not been followed, indicating that people have created a connection to a specific object, not an abstract concept.

You may think about some examples of the Foundation's effect in your own life. For example, real estate prices are often subject to an endowment effect, while sellers demand a price that exceeds the willingness of the consumer. At a smaller level, you can probably see the effect of the foundation if you look around your house and think about the value of the items you own. For example, how much do you think the chair you are sitting with is worth?

This cognitive bias is also known as sales aversion and refers to the idea that because people are connected to objects they own often develop aversion to their sale or passing them. One significant contribution effect to the economy area has been overwhelmed by an understanding of the relationship between willingness to payfor objects and willingness to accept compensation for these items. In general, people are willing to pay less for items that do not own, and expect more compensation to sell items they own, despite the fact that it contradicts traditional economic theory.

It seems that the endowment effect is associated with the state of quo distortion, which states that people prefer the situation to remain static and unchanged. The change in ownership would obviously disrupt the status quo, which caused restlessness.