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Rational Choice in Experimental Markets

Plott, Charles R. (1986) Rational Choice in Experimental Markets. Journal of Business, 59 (4, pt. 2). S301-S327. ISSN 0021-9398.

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The theory of rational behavior has several different uses. First, it is used at the most fundamental level of experimental methodology to induce preferences used as parameters in models. Second, it appears repeatedly in experimentally successful mathematical models of complex phenomena such as speculation, bidding, and signaling. Third, it is used as a tool to generate ex post models of results that are otherwise inexplicable. Finally, it has been used as a tool successfully to design new institutions to solve specific problems. When tested directly, the theory can be rejected. It is retained because neither an alternative theory nor an alternative general principle accomplishes so much.

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Additional Information:© 1986 The University of Chicago. Financial support from the National Science Foundation and from the Caltech Program of Enterprise and Public Policy is gratefully acknowledged. I wish to thank Kemal Guler for his help in processing the data used in Sec. III. I also wish to thank Barry Weingast and Harvey Reed for their collaboration on the ideas and background data processing that form that section Reprinted in Rational Choice: The Contrast between Economics and Psychology, edited by Robin M. Hogarth and Melvin W. Reder. Chicago: University of Chicago Press, 1987. Reprinted in The Limits of Rationality, edited by Karen Schweers Cook and Margaret Levi. Chicago: University of Chicago Press, 1990.
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Caltech Program of Enterprise and Public PolicyUNSPECIFIED
Issue or Number:4, pt. 2
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Deposited On:26 Mar 2014 21:42
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