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Rational Individual Behavior in Markets and Social Choice Processes

Plott, Charles R. (1993) Rational Individual Behavior in Markets and Social Choice Processes. Social Science Working Paper, 862. California Institute of Technology , Pasadena, CA. (Unpublished)

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This paper reviews a series of paradoxes that exist in the experimental economics literature. These paradoxes are instances in which otherwise accurate models of markets and social choice processes fail to capture the data of experiments. A loosely developed theory called The Discovered Preference Hypothesis is advanced in the paper as an explanation. Behavior seems to go through stages of rationality that begin with a type of myopia when faced with unfamiliar tasks. With incentives and practice, which might take the form of repeated decisions in the experimental work, (but might include play, banter, discussions with others, stages of commitment, etc.) the myopia gives way to what appears to be a. stage of more considered choices that reflect stable attitudes or preferences (as opposed to the labile attitudes identified by psychologists). Social institutions are seen as playing a role in the attainment of a third stage of rationality in which individual decisions incorporate the rationality of others, or the lack of it, in their own decisions.

Item Type:Report or Paper (Working Paper)
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Additional Information:Prepared for a conference on rational choice, Turin, Italy, October 1993. The support for this project provided by the National Science Foundation is gratefully acknowledged. Published as Plott, Charles R. (1996) Rational Individual Behavior in Markets and Social Choice Processes: the Discovered Preference Hypothesis. In: The Rational Foundations of Economic Behaviour. McMillian , London, pp. 225-250.
Group:Social Science Working Papers
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Series Name:Social Science Working Paper
Issue or Number:862
Record Number:CaltechAUTHORS:20170823-155731351
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80747
Deposited By: Jacquelyn Bussone
Deposited On:30 Aug 2017 18:51
Last Modified:03 Oct 2019 18:34

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