The endowment effect describes how individuals value items more highly simply because they own them. Once an object, like a mug or pen, is received, it becomes part of one’s possessions, and the thought of losing it can feel more painful than the joy of gaining a new item. This psychological bias indicates that the perceived value of an owned item surpasses its objective market value.

This idea aligns with prospect theory, which suggests that losses are felt more intensely than equivalent gains. Consequently, a person would rather keep the item they already possess than trade it for something else, even if the trade seems beneficial. This reluctance to part with owned items highlights the impact of ownership on decision-making and underscores the irrational nature of human preferences when it comes to value.