Arbeitspapier

Less Rationality, More Efficiency: a Laboratory Experiment on "Lemons" Markets

In 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.

Sprache
Englisch

Erschienen in
Series: CSLE Discussion Paper ; No. 2004-02 [rev.]

Klassifikation
Wirtschaft
Thema
guessing games
beauty contests
market failure
adverse selection
lemon problem
regulatory failure
paternalistic regulation
Marktmechanismus
Asymmetrische Information
Adverse Selection
Beschränkte Rationalität
Spieltheorie
Experiment

Ereignis
Geistige Schöpfung
(wer)
Kirstein, Annette
Kirstein, Roland
Ereignis
Veröffentlichung
(wer)
Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)
(wo)
Saarbrücken
(wann)
2004

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Kirstein, Annette
  • Kirstein, Roland
  • Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)

Entstanden

  • 2004

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