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Rational Choice in Experimental Markets

Plott, Charles R. (1986) Rational Choice in Experimental Markets. Social Science Working Paper, 598. California Institute of Technology , Pasadena, CA. (Unpublished)

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The theory of rational behavior has several different uses. (i) It is used at the most fundamental level of experimental methodology to induce preferences used as parameters in models. (ii) It appears repeatedly in experimentally successful mathematical models of complex phenomena such as speculation, bidding and signaling. (iii) It is used as a tool to generate ex-post models of results that are otherwise inexplicable. (iv) It has been used as a tool to successfully 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.

Item Type:Report or Paper (Discussion Paper)
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Additional Information: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 Section 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. Published as Plott, Charles R. "Rational choice in experimental markets." Journal of Business (1986): S301-S327.
Group:Social Science Working Papers
Funding AgencyGrant Number
Caltech Program of Enterprise and Public PolicyUNSPECIFIED
Subject Keywords:Auctions, Rational choice theory, Modeling, Economic models, Market prices, Trade intermediaries, Rationality, Parametric models, Supply, Economic theory
Series Name:Social Science Working Paper
Issue or Number:598
Record Number:CaltechAUTHORS:20170913-163001013
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81430
Deposited By: Jacquelyn Bussone
Deposited On:15 Sep 2017 17:58
Last Modified:03 Oct 2019 18:42

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