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
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Englisch
- Erschienen in
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Series: CSLE Discussion Paper ; No. 2004-02 [rev.]
- Klassifikation
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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
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Veröffentlichung
- (wer)
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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
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Objekttyp
- Arbeitspapier
Beteiligte
- Kirstein, Annette
- Kirstein, Roland
- Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)
Entstanden
- 2004