Thursday, October 15, 2009

Rational Income-Maximisers

One supposition in perfect markets theory is rational income-maximization actors.. However, an experiment bring by John List shows theory’s lack of real existence. On the experiment one person (A) were gifted with 10$ while another one (B) was not. The first one was compelled to give the part he wanted to the other. The other, has the option to reject it, in such case all 10$ would be lost.
Rational income-maximization actors’ principle would tell us that (A) would just give a cent to (B). Both win something and (B) would accept because that’s better than nothing. What List’s experiment showed was that people representing (B) almost never accepted such a less quantity and in average the amount trespassed was between two and three dollars.

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