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Anomalies: The endowment effect, loss aversion, and status quo bias

Anomalies are decisions that are hard to justify or rationalise. This paper discusses three: the endowment effect, status quo bias and loss aversion. The endowment effect is a bias for things you own, status quo bias is a bias for the current state of affairs and loss aversion is a disproportionate bias against loss. The implications of the anomalies in economics are discussed.

 

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