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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| Length: | |
| Date of creation: | Oct 2008 |
| Date of revision: | |
| Handle: | RePEc:not:notcdx:2008-12 |
| Contact details of provider: | Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD Phone: (44) 0115 951 5620 Fax: (0115) 951 4159 Web page: http://www.nottingham.ac.uk/economics/cedex/ More information through EDIRC
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References listed on IDEAS
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- Richard H. Thaler & Cass R. Sunstein, 2003. "Libertarian Paternalism," American Economic Review, American Economic Association, vol. 93(2), pages 175-179, May.
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