Question

Max's first guitar holds a special place in his heart. Despite being offered a fair price for it, he refuses to sell it, claiming its unique sound and sentimental value make it priceless.

Which scenario demonstrates the influence of the endowment effect on Max?

Max is influenced by his peers' valuation of his guitar, skewing the guitar’s worth.
Max asks for more than the market value due to his sentimental attachment to the guitar.
Max is setting a high initial selling price to give him an edge over negations during the sale.
Max believes the guitar's unique sound justifies a higher price, independent of market value.

Answer 1

"Max asks for more than the market value due to his sentimental attachment to the guitar."

Reason: the endowment effect is when ownership (and attachment) makes someone value an item more than market value. The other choices describe peer influence, negotiation strategy, or a quality-based judgment rather than the ownership-driven bias.