In an earlier paper we put forward a model of imprecise preferences which accounted for various forms of preference reversal. In this paper we show that the same model can also explain the best-known violations of expected utility theory's axioms of independence and betweenness. It appears that...

Asset market bubbles and crashes are a major source of economic instability and inefficiency. Sometimes ascribed to animal spirits or irrational exuberance, their source remains imperfectly understood. Experimental methods can isolate systematic deviations from an asset's fundamental value in a...