Myagkov, Mikhail and Plott, Charles R. (1997) Exchange Economies and Loss Exposure: Experiments Exploring Prospect Theory and Competitive Equilibria in Market Environments. American Economic Review, 87 (5). pp. 801-828. ISSN 0002-8282. https://resolver.caltech.edu/CaltechAUTHORS:20140224-161203868
|
PDF
- Published Version
See Usage Policy. 802kB |
Use this Persistent URL to link to this item: https://resolver.caltech.edu/CaltechAUTHORS:20140224-161203868
Abstract
Exchange economies were created in which individuals faced losses. If people are risk seeking in the losses, as predicted by prospect theory, then due to the nonconvexity, the competitive equilibria are all on the boundaries of the Edgeworth Box. The experimental results are that risk-seeking behavior is observed in many people and appears in markets as predicted. In addition, market behavior is consistent with answers to hypothetical questionnaires. Contrary to prospect theory, risk seeking seems to diminish with experience: preferences in the market setting are not labile; and risk-seeking preferences are not simply a result of framing effects.
| Item Type: | Article | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Related URLs: |
| |||||||||
| Additional Information: | © 1997 American Economic Association. The research funding of the National Science Foundation is gratefully acknowledged, as is the support by the Caltech Laboratory for Experimental Economics and Political Science. The authors wish to thank Donald Brown, whose insights lead to the designing of these experiments. In addition, the author wishes to thank Colin Camerer, Timothy Cason, David Grether, Daniel Kahneman, Richard Thaler, and Amos Tversky for their comments on this, and many closely related subjects. | |||||||||
| Group: | Social Science Working Papers | |||||||||
| Funders: |
| |||||||||
| Issue or Number: | 5 | |||||||||
| Classification Code: | JEL: C91, C92, D50, D80 | |||||||||
| Record Number: | CaltechAUTHORS:20140224-161203868 | |||||||||
| Persistent URL: | https://resolver.caltech.edu/CaltechAUTHORS:20140224-161203868 | |||||||||
| Official Citation: | Exchange Economies and Loss Exposure: Experiments Exploring Prospect Theory and Competitive Equilibria in Market Environments Mikhail Myagkov and Charles R. Plott The American Economic Review , Vol. 87, No. 5 (Dec., 1997) , pp. 801-828 Published by: American Economic Association Article Stable URL: http://www.jstor.org/stable/2951326 | |||||||||
| Usage Policy: | No commercial reproduction, distribution, display or performance rights in this work are provided. | |||||||||
| ID Code: | 43961 | |||||||||
| Collection: | CaltechAUTHORS | |||||||||
| Deposited By: | INVALID USER | |||||||||
| Deposited On: | 25 Feb 2014 16:29 | |||||||||
| Last Modified: | 03 Oct 2019 06:13 |
Repository Staff Only: item control page
