This paper pits neoclassical theory against prospect theory by investigating several clean tests of the competing hypotheses. Consistent with previous work, the field experimental data suggest that prospect theory adequately organizes behavior among inexperienced consumers, whereas consumers...

We compare behavior across students and professional traders from the Chicago Board of Trade in a classic Allais paradox experiment. Our experiment tests whether independence, a necessary condition in expected utility theory, is systematically violated. We find that both students and...

This study advances, and experimentally tests, a new explanation for the disparity between willingness to pay (WTP) and willingness to accept (WTA)—a dynamic neoclassical theory based on the presence of commitment costs. While to date neoclassical models have not explained the observed...