This paper pits neoclassical theory against prospect theory by investigating several clean tests of the competing hypotheses. Consistent with previous work, the field experimental data suggest that prospect theory adequately organizes behavior among inexperienced consumers, whereas consumers with intense market experience behave largely in accordance with neoclassical predictions. The data indicate that the convergence in values occurs entirely because of lower Hicksian equivalent surplus values.
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Paper provided by The Field Experiments Website in its series Framed Field Experiments with number
0050.
Find related papers by JEL classification: C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
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