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Do Anomalies Disappear in Repeated Markets?


  • Loomes, Graham

    (University of East Anglia)

  • Chris Starmer

    (University of Nottingham)

  • Robert Sugden

    (University of East Anglia)


There is some evidence that, as individuals participate in repeated markets, "anomalies" tend to disappear. One interpretation is that individuals — particularly marginal traders — are learning to act on underlying preferences which satisfy standard assumptions. An alternative interpretation, the "shaping" hypothesis, is that individuals" preferences are adjusting in response to cues given by market prices. The paper reports an experiment designed to discriminate between these hypotheses with particular reference to the disparity between willingness to pay and willingness to accept. Copyright Royal Economic Society 2003
(This abstract was borrowed from another version of this item.)

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  • Loomes, Graham & Chris Starmer & Robert Sugden, 2002. "Do Anomalies Disappear in Repeated Markets?," Royal Economic Society Annual Conference 2002 132, Royal Economic Society.
  • Handle: RePEc:ecj:ac2002:132

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    References listed on IDEAS

    1. David M. Grether & James C. Cox, 1996. "The preference reversal phenomenon: Response mode, markets and incentives (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(3), pages 381-405.
    2. Shogren, Jason F. & Cho, Sungwon & Koo, Cannon & List, John & Park, Changwon & Polo, Pablo & Wilhelmi, Robert, 2001. "Auction mechanisms and the measurement of WTP and WTA," Resource and Energy Economics, Elsevier, vol. 23(2), pages 97-109, April.
    3. Jack Knetsch & Fang-Fang Tang & Richard Thaler, 2001. "The Endowment Effect and Repeated Market Trials: Is the Vickrey Auction Demand Revealing?," Experimental Economics, Springer;Economic Science Association, vol. 4(3), pages 257-269, December.
    4. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
    5. Franciosi Robert & Isaac R. Mark & Pingry David E. & Reynolds Stanley S., 1993. "An Experimental Investigation of the Hahn-Noll Revenue Neutral Auction for Emissions Licenses," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 1-24, January.
    6. Binmore, Ken, 1999. "Why Experiment in Economics?," Economic Journal, Royal Economic Society, vol. 109(453), pages 16-24, February.
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