Are ‘True’ Preferences Revealed in Repeated Markets? An Experimental Demonstration of Context-dependent Valuations
AbstractThis paper reports a new and significant experimental demonstration that market participants adjust their bids towards the price observed in previous market periods when – by design – individuals’ values should not be affiliated with the market price. This demonstration implies that market prices may not adjust as standard comparative statics predicts and emphasizes the significance of social aspects even in market contexts. Hence, the present study shows that market behaviour is not anomaly-free. Indeed, market behaviour does not reveal the underlying true preferences but rather context-dependent preferences.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2008-12.
Date of creation: Oct 2008
Date of revision:
Contact details of provider:
Postal: University Park, Nottingham NG7 2RD
Phone: +44 (0) 115 951 5620
Fax: +44 (0) 115 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/
More information through EDIRC
Repeated markets; Economic principles; Anomalies; Experiment; Social interactions;
Other versions of this item:
- Fabio Tufano, 2010. "Are ‘true’ preferences revealed in repeated markets? An experimental demonstration of context-dependent valuations," Experimental Economics, Springer, vol. 13(1), pages 1-13, March.
- Fabio Tufano, 2008. "Are ‘True’ Preferences Revealed in Repeated Markets? An Experimental Demonstration of Context-dependent Valuations," Discussion Papers 2008-12, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-14 (All new papers)
- NEP-CBE-2008-12-14 (Cognitive & Behavioural Economics)
- NEP-EXP-2008-12-14 (Experimental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John A. List, 2003.
"Does Market Experience Eliminate Market Anomalies?,"
The Quarterly Journal of Economics,
MIT Press, vol. 118(1), pages 41-71, February.
- John List, 2003. "Does market experience eliminate market anomalies?," Natural Field Experiments 00297, The Field Experiments Website.
- Jason Shogren, 2006. "Valuation in the Lab," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 163-172, 05.
- Richard H. Thaler & Cass R. Sunstein, 2003. "Libertarian Paternalism," American Economic Review, American Economic Association, vol. 93(2), pages 175-179, May.
- Lusk,Jayson L. & Shogren,Jason F., 2007.
Cambridge University Press, number 9780521671248, December.
- Dan Ariely & George Loewenstein & Drazen Prelec, 2003. ""Coherent Arbitrariness": Stable Demand Curves Without Stable Preferences," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 73-105, February.
- Glaeser, Edward L., 2006. "Paternalism and Psychology," Working Paper Series rwp06-006, Harvard University, John F. Kennedy School of Government.
- Glenn W. Harrison & Ronald M. Harstad & E. Elisabet Rutstr–m, 2004.
"Experimental Methods and Elicitation of Values,"
Springer, vol. 7(2), pages 123-140, 06.
- Cooper, David & Rege, Mari, 2008. "Social Interaction Effects and Choice Under Uncertainty. An Experimental Study," UiS Working Papers in Economics and Finance 2009/24, University of Stavanger.
- Beraldo, Sergio & Filoso, Valerio & Marco, Stimolo, 2013. "Endogenous Preferences and Conformity: Evidence From a Pilot Experiment," MPRA Paper 48539, University Library of Munich, Germany.
- Jay R. Corrigan & Andreas C. Drichoutis & Jayson L. Lusk & Rodolfo M. Nayga & Matthew C. Rousu, 2012.
"Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 94(1), pages 97-115.
- Corrigan, Jay & Drichoutis, Andreas & Lusk, Jayson & Nayga, Rodolfo & Rousu, Matt, 2011. "Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration," MPRA Paper 28337, University Library of Munich, Germany.
- Drew Fudenberg & David K. Levine & Zacharias Maniadis, 2010. "Re-examining coherent arbitrariness for the evaluation of common goods and simple lotteries," Working Papers 034, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
- Zacharias Maniadis & Fabio Tufano & John List, 2013.
"One Swallow Does not Make a Summer: New Evidence on Anchoring Effects,"
Levine's Working Paper Archive
786969000000000824, David K. Levine.
- Zacharias Maniadis & Fabio Tufano & John A. List, 2014. "One Swallow Doesn't Make a Summer: New Evidence on Anchoring Effects," American Economic Review, American Economic Association, vol. 104(1), pages 277-90, January.
- Andrea Isoni & Peter Brooks & Graham Loomes & Robert Sugden, 2011. "Do markets reveal preferences - or shape them?," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 11-03, School of Economics, University of East Anglia, Norwich, UK..
- Drew Fudenberg & David K. Levine & Zacharias Maniadis, 2012.
"On the Robustness of Anchoring Effects in WTP and WTA Experiments,"
American Economic Journal: Microeconomics,
American Economic Association, vol. 4(2), pages 131-45, May.
- Drew Fudenberg & David K Levine & Zacharias Maniadis, 2010. "On the Robustness of Anchoring Effects in WTP and WTA Experiments," Levine's Working Paper Archive 661465000000000312, David K. Levine.
- Jeffrey Livingston, 2010. "The effect of id verification in online auctions: Evidence from a field experiment," Natural Field Experiments 00273, The Field Experiments Website.
- Zacharias Maniadis & Fabio Tufano & John A List, 2013. "One Swallow Doesnâ€™t Make a Summer: New Evidence on Anchoring Effects," Discussion Papers 2013-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alex Possajennikov).
If references are entirely missing, you can add them using this form.