This question asks you to extend the model of projection bias and the endowment effect that we studied in class.

(a) Suppose we ask an unendowed person to predict what her selling price would be if she were endowed with a mug. Solve for her predicted selling price.

(b) Suppose we ask an endowed person to predict what her buying price would be if she were not endowed with a mug. Solve for her predicted buying price.

(c) How do these predictions compare to the actual selling and buying prices that we derived in class? How does your answer depend on ?

(d) How do these predictions compare to each other? How does your answer depend on ?

Question 4: This question asks you to extend the model of projection bias and the endowment effect that we studied in class. (a) Suppose we ask an unendowed person to predict what her selling price would be if she were endowed with a mug. Solve for her predicted selling price. (b) Suppose we ask an endowed person to predict what her buying price would be if she were not endowed with a mug. Solve for her predicted buying price. (c) How do these predictions compare to the actual selling and buying prices that we derived in class? How does your answer depend on a? (d) How do these predictions compare to each other? How does your answer depend on a? Question 4: This question asks you to extend the model of projection bias and the endowment effect that we studied in class. (a) Suppose we ask an unendowed person to predict what her selling price would be if she were endowed with a mug. Solve for her predicted selling price. (b) Suppose we ask an endowed person to predict what her buying price would be if she were not endowed with a mug. Solve for her predicted buying price. (c) How do these predictions compare to the actual selling and buying prices that we derived in class? How does your answer depend on a? (d) How do these predictions compare to each other? How does your answer depend on a