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What Is a Shadow Price? Why Is It Advantageous to Include

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Essay

What is a shadow price? Why is it advantageous to include shadow prices in economic models?


Definitions:

Autonomous Morality

Piaget’s second stage of morality in which children have a more flexible view of rules as they begin to value fairness and equality and account for factors like act, intent, and situation.

Heteronomous Morality

Piaget’s first stage of morality when children become aware of rules and view them as absolute and unalterable.

Mutual Perspective Taking

The ability to understand the thoughts and feelings of others from their viewpoint as well as one's own.

Reasoning

The cognitive function of forming deductions, evaluations, or conclusions based on given facts or propositions.

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