Abstract: Endowment effect refers to a phenomenon that people sometimes demand much more to give up an object of their own than they are, or would ever be, willing to pay to acquire the very same object. This phenomenon is universal in behavioral economics. This paper introduced the concepts and research paradigms of endowment effects, including the classical paradigm and barter trade paradigm, and elaborated two psychological mechanism of endowment effect, namely, loss aversion and query theory. Then the paper came to some influential factors of endowment effect, including motivation, emotions, object’s character, and study design characteristics. Finally, the issues deserved further research were also outlined, such as the origin and applied conditions of endowment effect.

Key words: endowment effect, loss aversion, query theory