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  1. ‘But can't we get the same thing with a standard model?’ Rationalizing bounded-rationality models.Ran Spiegler - 2011 - Economics and Philosophy 27 (1):23-43.
    This paper discusses a common criticism of economic models that depart from the standard rational-choice paradigm - namely, that the phenomena addressed by such models can be???rationalized??? by some standard model. I criticize this criterion for evaluating bounded-rationality models. Using a market model with boundedly rational consumers due to Spiegler as a test case, I show that even when it initially appears that a bounded-rationality model can be rationalized by a standard model, rationalizing models tend to come with unwarranted???extra baggage???. (...)
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  • Does product complexity matter for competition in experimental retail markets?Stefania Sitzia & Daniel John Zizzo - 2011 - Theory and Decision 70 (1):65-82.
    We describe a first experiment on whether product complexity affects competition and consumers in retail markets. We are unable to detect a significant effect of product complexity on prices, except insofar as the demand elasticity for complex products is higher. However, there is qualified evidence that complex products have the potential to induce consumers to buy more than they would otherwise. In this sense, consumer exploitability in quantities cannot be ruled out. We also find evidence for shaping effects: consumers’ preferences (...)
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  • Inattentive consumers in markets for services.Stefania Sitzia, Jiwei Zheng & Daniel John Zizzo - 2015 - Theory and Decision 79 (2):307-332.
    In an experiment on markets for services, we find that consumers are likely to stick to default tariffs and achieve suboptimal outcomes. We find that inattention to the task of choosing a better tariff is likely to be a substantial problem in addition to any task and tariff complexity effect. The institutional setup on which we primarily model our experiment is the UK electricity and gas markets, and our conclusion is that the new measures by the UK regulator Ofgem to (...)
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  • Money pumps in the market.Ariel Rubinstein - manuscript
    Agents who employ non-rational choice procedures are often vulnerable to exploitation, in the sense that a profit-seeking trader can offer them a harmful transaction which they will nevertheless accept. We examine the vulnerability of a procedure for deciding whether to buy a lottery: observe another agent who already bought it and buy the lottery if that agent’s experience was positive. We show that the exploitation of such agents can be embedded in an inter-temporal market mechanism, in the form of speculative (...)
     
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