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Komlos – Indifference curves

A commentary on Indifference curves

In a 7min 45sec YouTube clip, John Komlos explains that the common representation of indifference curves does not apply if preferences depend on the person’s prevailing pattern of consumption. The clip is at:

He describes the clip as follows:

‘Conventional indifference curves are wrong’

We explain that the standard indifference curves are incorrect, because they fail to specify the current level of consumption. The correct indifference curves have to incorporate the endowment effect which has been documented in countless experiments. According to the endowment effect people are willing to give up a good at only a higher price than they are willing to acquire it. Read more about it in my book: What Every Economics Student Needs to Know and Doesn’t Get in the Usual Principles Text (New York: M.E. Sharpe, 2014) p. 37.


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