3.Why are there ridiculously over-priced used-goods...

The famous 1991 study conducted under the leadership of Daniel Kahneman with 6 students with 3 of them given coffee mugs while other three were given 6 dollars each. The groups of buyers (ones who were given cash) and the sellers (ones with the mugs) were selected randomly. The economists who conducted the experiment assumed that some of them, who wanted cash, will trade the mugs to those who wanted a mug.

To their surprise, no trade happened. The sellers kept asking an average price of over 5 dollars for their mugs, while the buyers were not willing to spend anything more than 2.50 dollars for a mug. The experiment highlights the ownership of an object, for whatsoever short duration of time it may, makes you value it far higher than its real cost.

Richard Thaler, a distinguished behavioral economist at the University of Chicago- Booth School of Business, termed this psychological pitfall as the endowment effect. He pointed out that ‘people often demand much more to give up an object than they would be willing to pay to acquire it'. It means people ascribe more value to things merely because they own them.

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