Question

Jenny’s books no longer fit in her backpack. Her friends suggest selling it, but she thinks it's worth more than anyone would pay. She believes no other backpack can match hers, even though others have better features.

Which type of cognitive bias is Jenny exhibiting in the scenario?

Answer 1

This is the endowment effect (ownership effect). Owners tend to overvalue things they possess and demand more to give them up than others would pay — driven by loss aversion. Jenny’s belief that her backpack is worth more and that no other can match it, despite better alternatives, fits this bias.