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Do markets reveal preferences or shape them?
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Isoni, Andrea, Brooks, Peter, Loomes, Graham and Sugden, Robert (2016) Do markets reveal preferences or shape them? Journal of Economic Behavior & Organization, 122 . pp. 1-16. doi:10.1016/j.jebo.2015.11.006 ISSN 0167-2681.
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Official URL: http://dx.doi.org/10.1016/j.jebo.2015.11.006
Abstract
We contrast the proposition that markets reveal independently existing preferences with the alternative possibility that they may help to shape them. Using demand-revealing experimental market institutions, we separate the shaping effects of price cues from the effects of market discipline. We find that individual valuations and prevailing prices are systematically affected by both exogenous manipulations of price expectations and endogenous but divergent price feedback. These effects persist to varying degrees, in spite of further market experience. In some circumstances, market experience may actually consolidate them. We discuss possible explanations for these effects of uninformative price cues on revealed preferences.
Item Type: | Journal Article | ||||||||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Behavioural Science Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Capital market, Economics -- Psychological aspects, Economics | ||||||||||
Journal or Publication Title: | Journal of Economic Behavior & Organization | ||||||||||
Publisher: | Elsevier BV * North-Holland | ||||||||||
ISSN: | 0167-2681 | ||||||||||
Official Date: | February 2016 | ||||||||||
Dates: |
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Volume: | 122 | ||||||||||
Page Range: | pp. 1-16 | ||||||||||
DOI: | 10.1016/j.jebo.2015.11.006 | ||||||||||
Status: | Peer Reviewed | ||||||||||
Publication Status: | Published | ||||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||||
Date of first compliant deposit: | 27 January 2016 | ||||||||||
Date of first compliant Open Access: | 17 February 2016 |
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