Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace

Several experimental studies have provided evidence that suggest indifference curves have a kink around the current endowment level. These results, which clearly contradict closely held economic doctrines, have led some influential commentators to call for an entirely new economic paradigm to displa...

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Veröffentlicht in:Econometrica Jg. 72; H. 2; S. 615 - 625
1. Verfasser: List, John A.
Format: Journal Article
Sprache:Englisch
Veröffentlicht: Oxford, UK and Boston, USA Blackwell Publishing Ltd 01.03.2004
Econometric Society
Blackwell
Schlagworte:
Apathy
Applications
Behavior
Biology, psychology, social sciences
Candy
Candy bars
Chocolate bars
Coffee mugs
Consumer behavior
Consumer psychology
Consumers
Econometrics
Economic analysis
Economic theory
Empirical evidence
Endowment
Endowment effect
Endowments
Evidence
Exact sciences and technology
experience
Experiments
field experiment
Inference from stochastic processes; time series analysis
Insurance, economics, finance
Market
Markets
Mathematics
Neoclassical economics
Notes and Comments
Null hypothesis
Probability and statistics
Probability theory and stochastic processes
Prospect theory
Psychological aspects
Psychological theories
Sciences and techniques of general use
Statistics
Stochastic processes
Theory
Transference
Statistical method
Economics
Consumer behavior
Prediction
Prediction theory
Psychometrics
Statistical estimation
Filtering theory
Econometrics
Experimental study
Stochastic process
ISSN:0012-9682, 1468-0262
Online-Zugang:Volltext
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Beschreibung
Zusammenfassung:Several experimental studies have provided evidence that suggest indifference curves have a kink around the current endowment level. These results, which clearly contradict closely held economic doctrines, have led some influential commentators to call for an entirely new economic paradigm to displace conventional neoclassical theory--e.g., prospect theory, which invokes psychological effects. This paper pits neoclassical theory against prospect theory by investigating data drawn from more than 375 subjects actively participating in a well-functioning marketplace. The pattern of results suggests that prospect theory adequately organizes behavior among inexperienced consumers, but consumers with intense market experience behave largely in accordance with neoclassical predictions. Moreover, the data are consistent with the notion that consumers learn to overcome the endowment effect in situations beyond specific problems they have previously encountered. This "transference of behavior" across domains has important implications in both a positive and normative sense.
Bibliographie:ark:/67375/WNG-6WCM41FQ-D
ArticleID:ECTA502
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SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0012-9682
1468-0262
DOI:10.1111/j.1468-0262.2004.00502.x