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Do Anomalies Disappear in Repeated Markets?

Author

Listed:
  • Graham Loomes

    (University of East Anglia)

  • Chris Starmer

    (University of Nottingham)

  • Robert Sugden

    (University of East Anglia)

Abstract

There is some evidence that, as individuals participate in repeated markets, "anomalies" tend to disappear. One interpretation is that individuals — particularly marginal traders — are learning to act on underlying preferences which satisfy standard assumptions. An alternative interpretation, the "shaping" hypothesis, is that individuals" preferences are adjusting in response to cues given by market prices. The paper reports an experiment designed to discriminate between these hypotheses with particular reference to the disparity between willingness to pay and willingness to accept. Copyright Royal Economic Society 2003

Suggested Citation

  • Graham Loomes & Chris Starmer & Robert Sugden, 2003. "Do Anomalies Disappear in Repeated Markets?," Economic Journal, Royal Economic Society, vol. 113(486), pages 153-166, March.
    • Handle: RePEc:ecj:econjl:v:113:y:2003:i:486:p:c153-c166
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