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According to the Koszegi-Rabin model, people's reference points are determined by their recent expectations about outcomes. Suppose that, for an endowment effect experiment, people's expec- - are formed prior to entering the lab. According to tations - and thus their reference points the Koszegi-Rabin model, would we expect such people to exhibit a larger or smaller endow ment effect than is predicted by the endowment effect model that we studied in class? Briefly explain TOur ncrer

According to the Koszegi-Rabin model, people's reference points are determined by their recent expectations about outcomes. Suppose that, for an endowment effect experiment, people's expec- - are formed prior to entering the lab. According to tations - and thus their reference points the Koszegi-Rabin model, would we expect such people to exhibit a larger or smaller endow ment effect than is predicted by the endowment effect model that we studied in class? Briefly explain TOur ncrer

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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According to the Koszegi-Rabin model, people's reference points are determined by their recent expectations about outcomes. Suppose that, for an endowment effect experiment, people's expec- tations – and thus their reference points – sre formed prior to entering the lab. According to the Koszegi-Rabin model, would we expect such people to exhibit a larger or smaller endow ment effect than is predicted by the endowment effect model that we studied in class? Briefly explain your answer.
Transcribed Image Text:According to the Koszegi-Rabin model, people's reference points are determined by their recent expectations about outcomes. Suppose that, for an endowment effect experiment, people's expec- tations – and thus their reference points – sre formed prior to entering the lab. According to the Koszegi-Rabin model, would we expect such people to exhibit a larger or smaller endow ment effect than is predicted by the endowment effect model that we studied in class? Briefly explain your answer.
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