Thaler's stolen bottles of wine illustrate the endowment effect because

a. thaler places a higher value on bottles of wine when he owns them than when he does not own them.

b. thaler would rather have given the original bottles of wine away than have them stolen.

c. thaler's preferences for bottles of wine have changed over time.

d. new bottles of wine are not a perfect substitute for the original bottles of wine.

e. thaler is reluctant to buy bottles of wine again because they are associated with increased risk.

Question

Business

Jovanny Ayala

8 July, 05:00

Thaler's stolen bottles of wine illustrate the endowment effect because

a. thaler places a higher value on bottles of wine when he owns them than when he does not own them.

b. thaler would rather have given the original bottles of wine away than have them stolen.

c. thaler's preferences for bottles of wine have changed over time.

d. new bottles of wine are not a perfect substitute for the original bottles of wine.

e. thaler is reluctant to buy bottles of wine again because they are associated with increased risk.

+4

Answers (1)

Know the Answer?

Roy Kerr · Answer 1

It is because Thaler places a higher value on bottles of wine whe he owns them than when he does not own them. This is the reason as to why Thaler makes the statement " i am a good enough economist to know there's a bit of an inconsistency there'? Thaler's behavior is also inconsistence since he was ignoring the nonmonetary opportunity cost of the wine.