Path Independence, Rationality, and Social Choice

The paper provides several axiomatizations of the concept of "path independence" as applied to choice functions defined over finite sets. The axioms are discussed in terms of their relationship to "rationality" postulates and their meaning with respect to social choice models

Implementing automatic geographic referencing in Utah

Efforts to use a fully integrated approach to remote sensing in Utah include a realization that data and information are also resources to be managed. A possibility that information acquired for a specific use such as geological application may be of use to others, for instance, to the highway department. Utah is trying to establish a core operation within the state to make some upfront investment in hardware, software, and technical expertise, sufficient to make the operational people in the field aware of what can be done. The key to the operation is to facilitate, coordinate, and educate, so agencies can act for themselves based on their needs, desires, capabilities, and budget

The willingness to pay-willingness to accept gap, the "endowment effect," subject misconceptions, and experimental procedures for eliciting valuations

We conduct experiments to explore the possibility that subject misconceptions, as opposed to a particular theory of preferences referred to as the “endowment effect,” account for reported gaps between willingness to pay (“WTP”) and willingness to accept (“WTA”). The literature reveals two important facts. First, there is no consensus regarding the nature or robustness of WTP-WTA gaps. Second, while experimenters are careful to control for subject misconceptions, there is no consensus about the fundamental properties of misconceptions or how to avoid them. Instead, by implementing different types of experimental controls, experimenters have revealed notions of how misconceptions arise. Experimenters have applied these controls separately or in different combinations. Such controls include ensuring subject anonymity, using incentive-compatible elicitation mechanisms, and providing subjects with practice and training on the elicitation mechanism before employing it to measure valuations. The pattern of results reported in the literature suggests that the widely differing reports of WTP-WTA gaps could be due to an incomplete science regarding subject misconceptions. We implement a “revealed theory” methodology to compensate for the lack of a theory of misconceptions. Theories implicit in experimental procedures found in the literature are at the heart of our experimental design. Thus, our approach to addressing subject misconceptions reflects an attempt to control simultaneously for all dimensions of concern over possible subject misconceptions found in the literature. To this end, our procedures modify the Becker-DeGroot-Marschak mechanism used in previous studies to elicit values. In addition, our procedures supplement commonly used procedures by providing extensive training on the elicitation mechanism before subjects provide WTP and WTA responses. Experiments were conducted using both lotteries and mugs, goods frequently used in endowment effect experiments. Using the modified procedures, we observe no gap between WTA and WTP. Therefore, our results call into question the interpretation of observed gaps as evidence of loss aversion or prospect theory. Further evidence is required before convincing interpretations of observed gaps can be advanced

The winner's curse: experiments with buyers and with sellers

This paper explores the winner's curse phenomena as it was studied experimentally by Kagel and Levin. Experiments with the winner's curse are complicated by the fact that subjects can lose money and the experimenter has only a limited means of collecting it from them. Thus subjects enjoy only limited liability which has theoretical implications for behavior. In the Kagel and Levin experiments subjects were removed from the bidders' competition after losses reached a predetermined value. This experimental procedure has unknown implications for the results so ambiguity exists about whether the winner's curse was actually observed. In this study their results were replicated in an environment in which subjects were not removed. The case in which competitors are sellers is also studied. Bankruptcy cannot be a problem in sellers' competition. In both cases the winner's curse is observed. Thus the limited liability cannot be an explanation for the phenomenon reported by Kagel and Levin. In addition the paper examines the bidding behavior of all individuals and shows that this behavior does not fit any of the tested theories either on the aggregate or individual level. The "winner's curse" did not disappear over time during the conduct of the research

Exchange Asymmetries Incorrectly Interpreted as Evidence of Endowment Effect Theory and Prospect Theory?

Systematic asymmetries in exchange behavior have been widely interpreted as support for "endowment effect theory," an application of prospect theory positing that loss aversion and utility function kinks set by entitlements explain observed asymmetries. We experimentally test an alternative explanation, namely, that asymmetries are explained by classical preference theories finding influence through the experimental procedures typically used. Contrary to the predictions of endowment effect theory, we observe no asymmetries when we modify procedures to remove the influence of classical preference theories. When we return to traditional-type procedures, however, the asymmetries reappear. The results support explanations based in classical preference theories and reject endowment effect theory

Extreme Walrasian Dynamics: The Gale Example in the Lab

We study the classic Gale (1963) economy using laboratory markets. Tatonnement theory predicts prices will diverge from an equitable interior equilibrium towards infinity or zero depending only on initial prices. The inequitable equilibria determined by these dynamics give all gains from exchange to one side of the market. Our results show surprisingly strong support for these predictions. In most sessions one side of the market eventually outgains the other by more than twenty times, leaving the disadvantaged side to trade for mere pennies. We also find preliminary evidence that these dynamics are sticky, resisting exogenous interventions designed to reverse their trajectories

Stereoscopic computer graphics display system

Handbook was published on study which describes relative merits of two general-purpose, steroscopic display systems. Both systems are adaptable to most small data processing facilities and, with minimal hardware development, greatly enhance user ability to interact with computer and to interpret data output. Section also describes digital-to-analog converters designed for use with system

Prices and Portfolio Choices in Financial Markets: Theory, Econometrics, Experiments

Many tests of asset-pricing models address only the pricing predictions, but these pricing predictions rest on portfolio choice predictions that seem obviously wrong. This paper suggests a new approach to asset pricing and portfolio choices based on unobserved heterogeneity. This approach yields the standard pricing conclusions of classical models but is consistent with very different portfolio choices. Novel econometric tests link the price and portfolio predictions and take into account the general equilibrium effects of sample-size bias. This paper works through the approach in detail for the case of the classical capital asset pricing model (CAPM), producing a model called CAPM+ε. When these econometric tests are applied to data generated by large-scale laboratory asset markets that reveal both prices and portfolio choices, CAPM+εis not rejected