Are ‘true’ preferences revealed in repeated markets? An experimental demonstration of context-dependent valuations
This 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.
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Volume (Year): 13 (2010)
Issue (Month): 1 (March)
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- Glenn W. Harrison & Ronald M. Harstad & E. Elisabet Rutstr–m, 2004.
"Experimental Methods and Elicitation of Values,"
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"Does Market Experience Eliminate Market Anomalies?,"
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- John List, 2003. "Does market experience eliminate market anomalies?," Natural Field Experiments 00297, The Field Experiments Website.
- Glaeser, Edward L., 2006. "Paternalism and Psychology," Working Paper Series rwp06-006, Harvard University, John F. Kennedy School of Government.
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