Question: In class, we developed a simple model with mug utility and money utility, and we derived implica- tions for the reservation values of buyers, sellers,

In class, we developed a simple model with mug utility and money utility, and we derived implica- tions for the reservation values of

In class, we developed a simple model with mug utility and money utility, and we derived implica- tions for the reservation values of buyers, sellers, and choosers in endowment-effect experiments. This question asks you to think through several variants of that model. For all parts, assume that the person has wealth w = $15,000, and that (Total Utility) = (Mug Utility) +(Money Utility). (a) Let's begin with the case studied in class: Suppose that money utility is um(m) = m, and that mug utility is ulc,r) = uc +v(c-r) where nmug ** if x > 0 v(x) = Amug * Nmug #x if x 0 Imoney *nmoney ** if x 0 v(x) = Amug * Nmug #x if x 0 Imoney *nmoney ** if x

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