The Persistence of Evaluation Disparities

Does Market Experience Eliminate Market Anomalies?

“…Previous studies have examined learning over repeated trials in the lab (e.g., Coursey, Hovis, and Schulze [1987]). Critics contend that the evidence of learning is mixed, and overall the data do not support the underlying premise [Knetsch and Sinden 1987]. This conclusion is consistent with Camerer and Hogarth [1999], who note that useful cognitive capital builds up slowly, over days or years, rather than in the short run of an experiment.…”

An Experimental Examination of the House Money Effect in a Multi-Period Setting

“…The minimum and maximum bids in both treatments suggest that some traders place very high (low) bids in order to make sure that they will get (not get) a share. Others have noted that while the Vickrey auction provides incentives to reveal demand, the auction mechanism may not adequately reveal individual valuations (Knetsch and Sinden (1987)). Extreme bids like $100 or $0 likely do not reflect a trader's actual evaluation of the worth of the stock but these bids serve the trader's intent to acquire or not acquire the asset.…”

Why Are There NIMBYs?

“…The problem isn' t the concept itself, which has plenty of empirical evidence in support of it (Knetsch and Sinden 1987). (This is one of the few areas in economics in which psychological experiments have played an important role.)…”