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Title:Preference reversals and disparities between willingness to pay and willingness to accept in repeated markets PDF Logo
Authors:Loomes, Graham
Starmer, Chris
Sugden, Robert
Issue Date:2009
Series/Report no.:CeDEx discussion paper series 2009-24
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.
Subjects:preference reversal
willingness to accept
willingness to pay
repeated market
JEL:C91
Document Type:Working Paper
Appears in Collections:CeDEx Discussion Paper Series, The University of Nottingham

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