Question: Consider being confronted with two possible scenarios while participating in a laboratory experiment: a. Someone offers to sell you a coffee mug. You have a

Consider being confronted with two possible scenarios while participating in a laboratory experiment:

a. Someone offers to sell you a coffee mug. You have a reservation price for the mug (it is a nice one), and you bargain with the seller until you agree on a price that is less than or equal to your reservation price.

b. Someone gives you a coffee mug, then begins to bargain with you to buy it back. You have a reservation selling price and you agree on a price greater than or equal to that reservation price.

Is your reservation price in part (a) the same as your reservation selling price in (b)? Why or why not? Should such considerations matter in the design of experiments to elicit the value of public goods?

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The reservation price in part a buying may not necessarily be the same as the reservation selling price in part b selling This difference could be due ... View full answer

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