Do individual violations of subjective expected utility persist in markets? Insight from an experiment

Carmela Di Mauro () and Anna Maffioletti

No 58, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: Much of the evidence supporting the EllsbergÕs paradox comes from experiments on individual choice and judgement.In this study, we address the issue whether, in market experiments, there is a tendency for anomalous behaviour to disappear or to be reduced as a consequence of market experience and feedback. We empirically test the validity of this assumption by running an auction market for the sale of both risky and uncertain prospects. We conclude that, with the repetition of the market experience, individual bids converge towards behaviour consistent with subjective expected utility.

Keywords: risk; uncertainty; market; auctions; violation (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2003-06-04
New Economics Papers: this item is included in nep-exp
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