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Michaela has reference-dependent preferences over mugs (c) and money (c) - with reference points r and r2, respectively represented by the following utility function

Michaela has reference-dependent preferences over mugs (c1) and money (C2) – withreference points ri and r2, respectively — 

Michaela has reference-dependent preferences over mugs (c) and money (c) - with reference points r and r2, respectively represented by the following utility function U(C,C,r1,)= v(3C-3r) + V(C-r) where v(x) = x for x 0 and v(x) =3x for x < 0 Suppose that Michaela's initial endowment of money is zero, and that she starts with zero mugs. Assume that Michaela does not have a mug and is not expecting to purchase a mug. What are Michaela's buying prices, pb, for a mug?

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Michaela Utility Function is given by Uc1r1c2r2 v3c13r1 vc2r2 3vc... blur-text-image

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