Are ‘True’ Preferences Revealed in Repeated Markets? An Experimental Demonstration of Context-dependent Valuations

Fabio Tufano

No 2008-12, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: 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.

Keywords: Repeated markets; Economic principles; Anomalies; Experiment; Social interactions (search for similar items in EconPapers)
JEL-codes: C92 D01 D44 (search for similar items in EconPapers)
Date: 2008-10
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Citations: View citations in EconPapers (6)

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Journal Article: Are ‘true’ preferences revealed in repeated markets? An experimental demonstration of context-dependent valuations (2010)
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