Do Anomalies Disappear in Repeated Markets?
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
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|Date of creation:||29 Aug 2002|
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- Jack Knetsch & Fang-Fang Tang & Richard Thaler, 2001. "The Endowment Effect and Repeated Market Trials: Is the Vickrey Auction Demand Revealing?," Experimental Economics, Springer, vol. 4(3), pages 257-269, December.
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810, California Institute of Technology, Division of the Humanities and Social Sciences.
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- Binmore, Ken, 1999. "Why Experiment in Economics?," Economic Journal, Royal Economic Society, vol. 109(453), pages F16-24, February.
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