Question: A. Revisit the logic behind this conclusion before proceeding. a. One reason that homeowners do not constantly switch homes when housing prices fluctuate arises from

A. Revisit the logic behind this conclusion before proceeding.

a. One reason that homeowners do not constantly switch homes when housing prices fluctuate arises from the fact that there are moving costs that make switching homes not worthwhile for small price fluctuations. Now consider another explanation rooted in endowment effects uncovered by behavioral economists. Within the context of the model you used in exercises 6.9 and 7.6, how might you be able to model such endowment effects in terms of the shapes of indifference curves for homeowners?

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