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dc.contributor.authorKirstein, Annetteen_US
dc.contributor.authorKirstein, Rolanden_US
dc.description.abstractIn this paper we experimentally test a theory of boundedly rational behavior in a "lemons market." We analyzed two different market designs, for which perfect rationality implies complete and partial market collapse, respectively. Our empirical observations deviate substantially from these predictions of rational choice theory: Even after 20 repetitions, the actual outcome is closer to efficiency than expected. Our bounded rationality approach to explaining these observations starts with the insight that perfect rationality would require the players to perform an infinite number of iterative reasoning steps. Boundedly rational players, however, carry out only a limited number of such iterations. We have determined the iteration type of the players independently from their market behavior. A significant correlation exists between the iteration types and the observed price offers.en_US
dc.publisherUniversität des Saarlandes, CSLE - Center for the Study of Law and Economics Saarbrückenen_US
dc.relation.ispartofseriesCSLE Discussion Paper 2004-02 [rev.]en_US
dc.subject.keywordguessing gamesen_US
dc.subject.keywordbeauty contestsen_US
dc.subject.keywordmarket failureen_US
dc.subject.keywordadverse selectionen_US
dc.subject.keywordlemon problemen_US
dc.subject.keywordregulatory failureen_US
dc.subject.keywordpaternalistic regulationen_US
dc.subject.stwAsymmetrische Informationen_US
dc.subject.stwAdverse Selectionen_US
dc.subject.stwBeschränkte Rationalitäten_US
dc.titleLess Rationality, More Efficiency: a Laboratory Experiment on "Lemons" Marketsen_US
dc.typeWorking Paperen_US
Appears in Collections:CSLE Discussion Paper Series, CSLE - Center for the Study of Law and Economics, Universität des Saarlandes

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