Preference reversals and disparities between willingness to pay and willingness to accept in repeated markets

Graham Loomes (), Chris Starmer and Robert Sugden

No 09-07, Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) from School of Economics, University of East Anglia, Norwich, UK.

Abstract: Previous studies suggest that two otherwise robust 'anomalies' – preference reversals and disparities between buying and selling valuations – are eroded when respondents participate in repeated markets. We report an experiment which investigates whether this is true when factors neglected in previous studies are controlled, and which distinguishes between anomalies revealed in the behaviour of individual market participants and anomalies revealed in market prices. Our results confirm the decay of buy/sell disparities, but not of preference reversal. This raises doubts about the hypothesis that, in general, repeated markets reveal anomaly-free preferences, even among the marginal traders who determine prices.

Keywords: preference reversal; willingness to accept; willingness to pay; repeated market (search for similar items in EconPapers)
JEL-codes: C91 (search for similar items in EconPapers)
Date: 2009-11-10
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Preference reversals and disparities between willingness to pay and willingness to accept in repeated markets (2010)
Working Paper: Preference reversals and disparities between willingness to pay and willingness to accept in repeated markets (2009)
Working Paper: Preference reversals and disparities between willingness to pay and willingness to accept in repeated markets (2007)
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