Does Market Experience Eliminate Market Anomalies?

May combine two claims.

In the follow-up experiment, the 53 subjects who participated in both experiments stated they typically traded 5.70 times per month in Experiment I, significantly fewer than the 6.84 they reported in the follow-up experiment.

“the 53 subjects who participated in both experiments stated that they typically traded 5.70 times per month in Experiment I-signi cantly fewer trades than the 6.84 they reported in the follow-up experiment.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.

May combine two claims.

In Experiment I, dealers traded more than nondealers regardless of which good they were initially endowed: dealer trade rates were 43.6% and 45.7%, while nondealer trade rates were 20-25%.

“whereas 43.6 percent and 45.7 percent of dealers chose to execute a trade, only 20 -25 percent of nondealers chose to trade.”

• Also stated in: § 47 DOES MARKET EXPERIENCE ELIMINATE ANOMALIES? · plain

  “dealers tend to trade more than nondealers, regardless of which good they were initially endowed.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

In Experiment III follow-up, an endowment effect is evident for inexperienced consumers but not for experienced consumers: inexperienced traders executed a trade at 28% (9 of 32), while experienced consumers traded at 52.3% (11 of 21).

“an endowment effect is evident for inexperienced consumers, but not for experienced consumers: inexperienced traders (those who trade fewer than 7 times in a typical month) executed a trade at a rate of 28 percent (9 of 32), whereas 11 of 21 (52.3 percent) experienced consumers chose to trade.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

In the pooled data from Experiment I at the sportscard show, a significant endowment effect exists: trade rates were 32.8% and 34.6%, and Fisher's exact test rejects the null of no endowment effect at p < .001.

“The actual percentages of subjects who chose to trade are 32.8 percent (23 of 70) and 34.6 percent (27 of 78), suggesting that WTA .WTP.”

• Also stated in: § 47 DOES MARKET EXPERIENCE ELIMINATE ANOMALIES? · boosted

  “The result of the exact test presented in row 1, column 2 of Table II, strongly suggests that the null hypothesis should be rejected ( p , .001) for the pooled sample, implying that an endowment effect exists.”

• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

In Experiment I, nondealers were nearly 3.5 times more likely to select the good they were endowed with, whereas dealers were only 1.25 times more likely to choose their endowed good.

“These proportions suggest that nondealers were nearly 3.5 times more likely to select the good which they were endowed, whereas dealers were only 1.25 times more likely to choose their endowed good.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

In Experiment I dealer logit models, the trading experience coefficient of 0.03 is considerably weaker and not significant at conventional levels (t ≈ 1.5).

“the effect of trading experience for dealers in the monotonic model, 0.03, is considerably weaker and not signi cant at conventional levels (t ' 1.5).”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

In Experiment II at the pin market, women tend to trade less than men, but the difference is only marginally significant.

“Regression estimates also suggest that women tend to trade less than men, but the difference is only marginally signi cant.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

Of the 42 subjects who did not trade initially, 21 reported an increase, 13 a decrease, and 8 no change in monthly trading rate compared with the previous year.

“Of those 42 subjects, data in rows 1 and 2 of Table IX indicate that 21, 13, and 8 reported an increase, decrease, and no change in their monthly trading rate compared with the previous year.”

May combine two claims.

Although significant evidence of an endowment effect remains after four rounds, Fisher's exact test rejects the null of no treatment effect at p<.05 (p<.06) one-sided for treatment A(D).

“Although signi cant evidence of an endowment effect remains even after four rounds of trading experience, I nd via a Fisher's exact test that for treatment A (D) data the null hypothesis of no treatment effect is rejected at the p , .05 ( p , .06) level using a one-sided alternative.”

May combine two claims. The quote only partly states this claim.

Simulation of a two-good pure exchange economy with inexperienced consumers having downward inertial consumption yields that inertia is synonymous with undertrading and induces a larger increase in P, making net sellers of good 1 better off and net purchasers worse off.

“For brevity, I note that simulation of such a system yields insights consonant with Akerlof and Yellen [1985]: the inertia is synonymous with”

• cites Akerlof and Yellen [1985]Not checked yet

  Not checked in the free run.

• AssumptionThe authors state this as an assumption: In the simulation, there are two types of equally numbered consumers, type A and type B.
• AssumptionThe authors state this as an assumption: Within both consumer types, a proportion F of consumers is unsophisticated/inexperienced, and the remaining consumers are sophisticated/experienced.
• AssumptionThe authors state this as an assumption: Inexperienced consumers have downward inertial consumption of one of the goods (an extreme endowment effect), while experienced consumers have no such characteristic inherent in their preference structure.
• AssumptionThe authors state this as an assumption: All consumers maximize Cobb-Douglas utility functions of the form U = G1^φ G2^(1-φ).

May combine two claims.

In the sample selection bivariate probit estimates, little evidence indicates that selection bias is a major problem, even though r is significant at p<.01.

“Even though r is signi cant at conventional levels ( p , .01), the sample selection bivariate probit estimates suggest that little evidence exists to indicate that selection bias is a major problem.”

May combine two claims.

In Experiment I, dealers are much more active in trading cards and sports memorabilia and have had more years of experience in the sportscard and memorabilia market than nondealers.

“Central tendencies of the variables reveal that dealers are much more active in trading cards and sports memorabilia, and have had more years of experience in the sportscard and memorabilia market.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.

May combine two claims.

In auctions, offers and bids are significantly different for naive consumers but statistically indistinguishable for experienced consumers.

“Both of these observations extend quite well to statements of value in auctions, where offers and bids are signi cantly different for naive consumers, but statistically indistinguishable for experienced consumers.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

For dealers, mean WTA ($8.15) is approximately 1.30 times mean WTP ($6.27); a large-sample t-test cannot reject the null that mean WTP and WTA are equivalent at conventional significance (t=0.87).

“For dealers, the mean WTA ($8.15) is approximately 1.30 times larger than the mean WTP ($6.27).While this magnitude may appear signi cant, one needs to consider that a large-sample t-test cannot reject the null hypothesis that the mean WTP and WTA are equivalent at conventional signi cance levels (t 5 0.87).”

May combine two claims.

Equilibrium utility levels are second-order different for experienced and inexperienced consumers within each group, but overall welfare effects represent first-order movements along the economy's utility frontier.

“Equilibrium utility levels are second-order different for experienced and inexperienced consumers within each group, but the overall welfare effects represent rst-order movements along the economy's utility frontier.”

• AssumptionThe authors state this as an assumption: In the simulation, there are two types of equally numbered consumers, type A and type B.
• AssumptionThe authors state this as an assumption: Within both consumer types, a proportion F of consumers is unsophisticated/inexperienced, and the remaining consumers are sophisticated/experienced.
• AssumptionThe authors state this as an assumption: Inexperienced consumers have downward inertial consumption of one of the goods (an extreme endowment effect), while experienced consumers have no such characteristic inherent in their preference structure.
• AssumptionThe authors state this as an assumption: All consumers maximize Cobb-Douglas utility functions of the form U = G1^φ G2^(1-φ).

Probably not a substantial claim: may not pass S3 (load-bearing).

Results are strengthened when higher order terms are included.

“Results are strengthened when higher order terms are included.”

The quote only partly states this claim.

In Experiment III follow-up sportscard show, trading experience is positively associated with trading rates.

“the general results are consistent across model type and imply that experience and trading rates are associated.”

Probably not a substantial claim: may not pass S3 (load-bearing).

Inclusion of all four rows to form a 4x3 contingency matrix yields x2(6)=24.03.

“Inclusion of all four rows of data to form a 4 3 3 contingency matrix makes little inferential difference-the calculated x 2 (six degrees of freedom) equals 24.03.”

May combine two claims.

Trading rates were consistently higher in later trading sessions: 27% (9/33) of group 2 subjects traded in treatment A versus 11.4% in group 1; 25.7% (9/35) of group 2 subjects traded in treatment D versus 12% in group 1.

“Yet, when trading rates from group 1 treatment A (D) are compared with trading rates in group 2 treatment A (D), I nd trading rates that are consistently higher in the later trading sessions-27 percent (9/33) of group 2 subjects traded their good in treatment A, which compares favorably with the 11.4 percent in group 1.Furthermore, while only 12 percent of group 1 subjects traded in treatment D, 2”

May combine two claims.

For nondealers, mean WTA ($18.53) is approximately 5.6 times mean WTP ($3.32), a difference significant using a large-sample t-test (t=4.13).

“For nondealers, mean WTA ($18.53) is approximately 5.6 times larger than mean WTP ($3.32), a difference that is signi cant using a large-sample t-test (t 5 4.13).”

May combine two claims.

In an economy with initial distortions, the presence of inexperienced consumers can lead to first-order changes in social welfare as well as first-order changes in income distribution.

“Yet, similar to Akerlof and Yellen, in an economy with initial distortions the presence of inexperienced consumers can lead to rst-order changes in social welfare as well as rst-order changes in income distribution.”

• cites Akerlof and YellenNot checked yet

  Not checked in the free run.

• AssumptionThe authors state this as an assumption: In the simulation, there are two types of equally numbered consumers, type A and type B.
• AssumptionThe authors state this as an assumption: Within both consumer types, a proportion F of consumers is unsophisticated/inexperienced, and the remaining consumers are sophisticated/experienced.
• AssumptionThe authors state this as an assumption: Inexperienced consumers have downward inertial consumption of one of the goods (an extreme endowment effect), while experienced consumers have no such characteristic inherent in their preference structure.
• AssumptionThe authors state this as an assumption: All consumers maximize Cobb-Douglas utility functions of the form U = G1^φ G2^(1-φ).

May combine two claims.

Over the year, 27 subjects (51%) increased their monthly trading rate, 18 (34%) decreased, and 8 (15%) had flat trading rates compared with the previous year.

“The raw data show that over the course of the year, many subjects experienced a growth in their personal number of trades: 27 subjects (51 percent) increased their monthly trading rate, whereas 18 (34 percent) and 8 (15 percent) subjects decreased or had at trading rates compared with the previous year.”

May combine two claims.

In the follow-up sportscard field experiment, the endowment effect can be rejected in dealer data: ten of nineteen dealers (52.6%) chose to trade their endowed good.

“The endowment effect can again be rejected in these data, as ten of the nineteen dealers (52.6 percent) chose to trade their endowed good.”

May combine two claims.

In Experiment III, both explanations for the higher follow-up trading rate-that subjects gained experience over the year and that more active subjects gravitated toward the second experiment-are to some extent correct.

“Indeed, both statements are to some extent correct, as the 53 subjects who participated in both experiments stated that they typically traded 5.70 times per month in Experiment I-signi cantly fewer trades than the 6.84 they reported in the follow-up experiment.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.

Probably not a substantial claim: may not pass S3 (load-bearing).

In Experiment I, the results are robust to inclusion of higher order learning terms.

“Before proceeding, I should note that these results are robust to inclusion of higher order learning terms.”

Probably not a substantial claim: may not pass S3 (load-bearing).

In Experiment I, the dealer trading experience result may suggest that some dealers have had substantial opportunity to interact in a market setting, rendering the marginal impact of another trade less important.

“This result may suggest that some dealers have had substantial opportunity to interact in a market setting, rendering the marginal impact of another trade less important.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.

May combine two claims.

In Experiment II, regression results including cubic expansions support the conclusions that an endowment effect exists and that behavior converges as trading experience intensifies.

“the regression results presented in Table VI, which include expansions to the cubic, support these conclusions.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

Probably not a substantial claim: may not pass S3 (load-bearing).

In Experiment I, no subjects participated in more than one treatment.

“No subjects participated in more than one treatment.”

May combine two claims.

In Experiment I, the evidence is consistent with past experimental studies and at odds with conventional economic theory, which assumes indifference curves are completely reversible when transaction costs are zero.

“This evidence, which is consistent with past experimental studies, is at odds with conventional economic theory, which assumes that indifference curves are completely reversible when transactions costs are zero [Knetsch 1989].”

• cites Knetsch 1989Not checked yet

  Not checked in the free run.

Probably not a substantial claim: may not pass S3 (load-bearing).

In Experiment I, asking subjects to implicitly rank the two goods controls for all Hicksian income and substitution effects.

“since I ask subjects to (implicitly) rank the two goods, by de nition I am controlling for all Hicksian income and substitution effects.”

Classified as probably not a substantial claim. May combine two claims.

The pin market differs from the sports memorabilia market in having very few pin dealers, so the pin experiment focuses on nondealers.

“the pin market is different from the sports memorabilia market in that there are very few pin dealers: the extent of being a”

Classified as probably not a substantial claim.

In Experiment I, the uniqueness of the two goods guaranteed that subjects had not previously dealt with either piece of memorabilia.

“the uniqueness of the two goods guaranteed that the subject had not previously dealt with either piece of memorabilia.”

Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

In Experiment III, the empirical results are insensitive to inclusion of higher order experience terms, so only linear models are reported.

“Since the empirical results are insensitive to inclusion of higher order experience terms, I include estimates from only linear models.”

May combine two claims.

In Experiment III, the results are consistent with data from both the first sportscard field experiment and the pin field study.

“Results in Table VII are consistent with data from both the rst sportscard eld experiment and the pin eld study.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

Classified as probably not a substantial claim.

In Experiment I, subjects were randomly allocated to one of the two treatments.

“Since subjects are allocated to one of the two treatments randomly”

• Also stated in: § II. EXPERIMENTAL DESIGN I · plain

  “I follow Knetsch [1989] and Kahneman, Knetsch, and Thaler [1990] and use a straightforward random allocation de-43”

• cites Knetsch [1989]Not checked yet

  Not checked in the free run.

• cites Kahneman, Knetsch, and Thaler [1990]Not checked yet

  Not checked in the free run.

Classified as probably not a substantial claim. May combine two claims.

In a random allocation design, fewer than 50% of subjects should swap their good if an endowment effect exists, whereas approximately 50% should trade if no endowment effect exists.

“Since subjects are allocated to one of the two treatments randomly, fewer than 50 percent of the subjects should swap their good if an endowment effect exists.Alternatively, if an endowment effect does not exist, approximately 50 percent of the subjects should trade their good.”

Probably not a substantial claim: may not pass S4 (based). May combine two claims.

The current experimental design matches real-world settings that economic theory attempts to explain: traders endogenously select into the market and are likely to have previous experience trading related goods.

“The current experimental design matches real-world settings which economic theory attempts to explain: traders endogenously select into the market and they are likely to have previous experience trading related goods.”

May combine two claims.

In Kahneman, Knetsch, and Thaler [1990], eleven subjects should have traded their Cornell University coffee mugs, but only three trades were observed over four repetitions.

“Results are equally as convincing in Kahneman, Knetsch, and Thaler [1990], where eleven subjects should have traded their Cornell University coffee mugs, but only three trades were observed over four repetitions.”

• cites Kahneman, Knetsch, and Thaler [1990]Not checked yet

  Not checked in the free run.

May combine two claims.

The heterogeneity result is consistent with unobservables shaping the endowment effect and individuals having static preferences toward trading.

“This result is consistent with the notion that unobservables shape the endowment effect and that individuals have static preferences toward trading.”

May combine two claims.

These results support the findings above and reinforce the notion that useful cognitive capital builds up slowly, over days or years, rather than in the short run of an experiment.

“These results support the ndings above and reinforce the notion that useful cognitive capital builds up slowly, over days or years, rather than in the short run of an experiment.”

May combine two claims.

The results are robust to institutional change and extend beyond the two marketplaces studied.

“I also nd that these results are robust to institutional change and extend beyond the two marketplaces studied.”

• AssumptionRests on an assumption: The number of trades made in a typical month is a valid measure of market experience.
• AssumptionRests on an assumption: The sportscard and pin marketplaces studied are well-functioning marketplaces.

May combine two claims.

In Knetsch [1989], 89% of those originally endowed with a mug chose to keep the mug, and 90% of those endowed with a chocolate bar decided to keep the chocolate bar.

“In Knetsch [1989] the evidence in favor of the endowment effect is sharp: 89 percent of those originally endowed with a mug chose to keep the mug, and 90 percent of those endowed with a chocolate bar decided to keep the chocolate bar.”

• cites Knetsch [1989]Not checked yet

  Not checked in the free run.

Probably not a substantial claim: may not pass S1 (asserted), S4 (based).

If the endowment effect is a fundamental and stable component of agents' underlying preferences, then market experience and the endowment effect should be uncorrelated.

“If the endowment effect is a fundamental and stable component of agents' underlying preferences, then market experience and the endowment effect should be uncorrelated.”

Probably not a substantial claim: may not pass S3 (load-bearing).

Locke and Mann [2000] present evidence that certain classes of successful traders exhibit less loss-averting behavior than their less-successful rivals.

“Finally, studying trade histories for professional oor traders, Locke and Mann [2000] present evidence that suggests certain classes of”

• cites Locke and Mann [2000]Not checked yet

  Not checked in the free run.

Probably not a substantial claim: may not pass S4 (based). May combine two claims.

If for experienced litigants endowment effects disappear, then the basic independence assumption is restored and the basis for many normative arguments (Coase theorem) remains intact.

“But, if for experienced litigants endowment effects disappear, then the basic independence assumption is restored and the basis for many normative arguments (Coase theorem) remains intact.”

May combine two claims.

Within both institutions-observed trading rates and explicit value revelation-there is strong evidence that individual behavior converges to the neoclassical prediction as trading experience intensifies.

“Second, within both institutionsobserved trading rates and explicit value revelation-I nd strong evidence that individual behavior converges to the neoclassical prediction as trading experience intensi es.”