An Economist Encounters Some Unexpected Behavior in a Market or Laboratory

question 18

Multiple Choice

An economist encounters some unexpected behavior in a market or laboratory setting. How can he or she distinguish between behavior resulting from mistakes by decision makers as opposed to being decisions based on unusual preferences?

• A)If the same behavior is observed repeatedly even after opportunities to learn are provided,it is probably not a mistake.
• B)If the behavior is observed more often with inexperienced subjects,it is likely a mistake.
• C)Both a and b
• D)It is impossible to distinguish between mistakes and unusual preferences empirically.

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