Endowment effect

This article gives a basic definition in behavioral economics.
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Definition

The endowment effect is an effect whereby the value a person places on a good is greater if the person owns a good, i.e., if a property right to the good is established. The endowment effect is often measured in terms of a WTA/WTP gap: a gap between the money the person is Willing To Accept (WTA) to sell the good, and the money the person is Willing To Pay (WTP) to acquire the good.

Alternative explanations for apparent endowment effect

Mistaking amount paid for Willingness To Pay

Just because a person is unwilling to sell something for the price at which he/she bought it does not mean that an endowment effect is operational. Rather, the endowment effect is operational if the minimum amount the person is willing to accept exceeds the maximum amount the person is willing to pay.

For instance, I might value a book at a hundred units of money, but I might get it in the market at only ten units of money. In this case, the fact that I am unwilling to sell the book for ten units of money does not indicate an endowment effect, because the value of the book is a hundred units of money to me.

Transaction costs

In some cases, a gap between willingness to accept and willingness to pay may simply reflect transaction costs. For instance, if the value of a good to me is $x$ units, the cost of selling is $s$ units and the cost of buying is $b$ units, my willingness to accept is $x+s$ units and my willingness to pay is $x-b$ units, even in the absence of an endowment effect. The gap $b+s$ between the two prices reflects the sum total of the transaction cost of selling and the transaction cost of buying.

Status quo bias

In some cases, an unwillingness to resell a good may simply be a status quo bias. Here, a property right to a good does not increase my attachment to it but inertia and laziness prevent me from reselling it. The status quo bias may therefore prevent me from seeking buyers for goods I own. However, if I merely have a status quo bias and no endowment effect is operational, I may be less likely to reject a specific offer that somebody else makes.