Why does the endowment effect cause intersecting indifference curves? Because subjects mispredict how their reference point will adapt. Because the buying leg of one indifference curve intersects the selling leg of the other. Because one indifference curve is based on buying and the other is based on selling. Because loss aversion causes indifference curves to be kinked.

Why does the endowment effect cause intersecting indifference curves? Because subjects mispredict how their reference point will adapt. Because the buying leg of one indifference curve intersects the selling leg of the other. Because one indifference curve is based on buying and the other is based on selling. Because loss aversion causes indifference curves to be kinked.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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