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Thursday, July 24, 2014

'Sticky Prices and Behavioral Indifference Curves'

Is this why prices are sticky?:

Sticky prices and behavioural indifference curves, by John Komlos, Vox EU: Many quantities fail to respond smoothly to price changes. This column stresses that the ‘endowment effect’ – a well-known behavioral economics concept – implies kinks in indifference curves at the current consumption bundle price. Such kinks may account for the stickiness of prices, wages, and interest rates.

    Posted by on Thursday, July 24, 2014 at 08:20 AM in Economics | Permalink  Comments (4)


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