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Are ‘true’ preferences revealed in repeated markets? An experimental demonstration of context-dependent valuations

Published online by Cambridge University Press:  14 March 2025

Fabio Tufano
Fabio Tufano*
Affiliation:
Dipartimento di Economia, Università degli Studi dell’Insubria, Via Monte Generoso 71, 21100 Varese, Italy CeDEx, Nottingham School of Economics, Nottingham, UK
*
e-mail: [email protected]
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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

AuctionsValuationsEconomic principlesAnomaliesExperimentsSocial interactions

JEL classification

D01: Microeconomic Behavior: Underlying Principles D44: Auctions C92: Laboratory, Group Behavior
Type
Research Article
Information
Experimental Economics , Volume 13 , Issue 1 , March 2010 , pp. 1 - 13
Copyright
Copyright © Economic Science Association 2009

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Footnotes

Electronic supplementary material The online version of this article (http://dx.doi.org/10.1007/s10683-009-9226-8) contains supplementary material, which is available to authorized users.

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Supplementary material: File

Tufano supplementary material

Supplementary Material A. Subjects' Booklet
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Supplementary material: File

Tufano supplementary material

Supplementary Material B. Experimental Data
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