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Expectations and Learning in Iowa

Bondarenko, Oleg and Bossaerts, Peter (1997) Expectations and Learning in Iowa. Social Science Working Paper, 989. California Institute of Technology , Pasadena, CA. (Unpublished)

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We study the rationality of learning and the biases in expectations in the Iowa Experimental Markets. Using novel tests developed in Bossaerts [1996], learning in the Iowa winner-take-all markets is found to be in accordance with the rules of conditional probability (Bayes' law). Hence, participants correctly update their beliefs using the available information. There is evidence, however, that beliefs do not satisfy the restrictions of rational expectations that they reflect the factual distribution of outcomes.

Item Type:Report or Paper (Working Paper)
Related URLs:
URLURL TypeDescription ItemPublished Version
Bossaerts, Peter0000-0003-2308-2603
Additional Information:We thank Tom Rietz for sending us price and volume series from the Iowa; Experimental Market. Published as Bondarenko, O., & Bossaerts, P. (2000). Expectations and learning in Iowa. Journal of Banking & Finance, 24(9), 1535-1555.
Group:Social Science Working Papers
Subject Keywords:Arrow-Debreu Securities, Experimental Markets, Rational Expectations Equilibrium, Bayesian Equilibrium, Consistent Beliefs, Market Efficiency, Learning, Martingales.
Series Name:Social Science Working Paper
Issue or Number:989
Classification Code:JEL: C90, D84, G14
Record Number:CaltechAUTHORS:20170815-145720985
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80433
Deposited By: Jacquelyn Bussone
Deposited On:15 Aug 2017 22:26
Last Modified:03 Oct 2019 18:30

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