The endowment effect is the finding that simply owning an object increases how much a person values it, independent of the object's actual market worth. This breaks a basic assumption of standard economic theory — that the price someone would pay to acquire something and the price they'd accept to give up the identical thing should be roughly the same. In practice, they aren't close: sellers reliably demand far more than buyers are willing to pay for the exact same item.
The effect isn't about greed or negotiating strategy — it shows up even in one-shot lab experiments with strangers and no room to haggle. It reflects something more basic about how the mind values what it already has differently from what it's merely considering acquiring, tied closely to loss aversion: giving up something already possessed feels like a loss, and losses are weighted more heavily than equivalent gains.
In a now-classic series of experiments, half of a group of students were randomly given a coffee mug and asked the minimum price they'd be willing to sell it for; the other half, who received no mug, were asked the maximum they'd pay to buy one. On average, sellers demanded roughly twice as much as buyers were willing to offer for the exact same mug — even though which group someone ended up in was determined purely by a coin flip, with no connection to how much anyone actually liked mugs.