A Caltech Library Service

Expectations and learning in Iowa

Bondarenko, Oleg and Bossaerts, Peter (2000) Expectations and learning in Iowa. Journal of Banking and Finance, 24 (9). pp. 1535-1555. ISSN 0378-4266. doi:10.1016/S0378-4266(99)00090-4.

Full text is not posted in this repository. Consult Related URLs below.

Use this Persistent URL to link to this item:


We study the rationality of learning and the biases in expectations in the Iowa Experimental Markets. Using novel tests developed in (Bossaerts, P., 1996. Martingale restrictions on equilibrium security prices under rational expectations and consistent beliefs. Caltech working paper; Bossaerts, P., 1997. The dynamics of equity prices in fallible markets. Caltech working paper), 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:Article
Related URLs:
URLURL TypeDescription ItemWorking Paper
Bossaerts, Peter0000-0003-2308-2603
Additional Information:© 2000 Elsevier Science B.V. Received 27 July 1997, Accepted 2 September 1999, Available online 15 August 2000.
Subject Keywords:Arrow–Debreu securities; Experimental markets; Rational expectations equilibrium; Bayesian equilibrium; Consistent beliefs; Market efficiency; Learning; Martingales
Issue or Number:9
Classification Code:JEL: C90; D84; G14
Record Number:CaltechAUTHORS:20170818-084744712
Persistent URL:
Official Citation:Oleg Bondarenko, Peter Bossaerts, Expectations and learning in Iowa, Journal of Banking & Finance, Volume 24, Issue 9, September 2000, Pages 1535-1555, ISSN 0378-4266, (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80600
Deposited By: Tony Diaz
Deposited On:18 Aug 2017 17:40
Last Modified:15 Nov 2021 19:37

Repository Staff Only: item control page