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?

Question

Quizplus · Accepted Answer

Both options provide helpful indications to distinguish between mistakes and unusual preferences. Option A suggests that repeated behavior indicates a deliberate decision rather than a mistake, while Option B implies that mistakes are more likely with inexperienced individuals. Considering both options together can allow for a more nuanced understanding of economic decision-making.

An Economist Encounters Some Unexpected Behavior in a Market or Laboratory