PREFERENCES AND NONREVERSIBILITY OF INDIFFERENCE CURVES

New evidence indicating that people commonly demand more to give up an entitlement than they would pay to acquire the same good suggests that reversible indifference curves may not accurately reflect consumer preference orderings. This paper presents the results of two direct experimental tests of such reversibilities. The tests used two commodity sets, two different experimental designs, and both student and non-student participants. The results of both experiments showed large valuation disparities, consistent with other tests of an endowment effect, and nonreversibility of indifference curves. © 1991.