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An Economist’s Perspective on Probability Matching
Author(s) -
Vulkan Nir
Publication year - 2000
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/1467-6419.00106
Subject(s) - phenomenon , economics , matching (statistics) , perspective (graphical) , positive economics , term (time) , mathematical economics , econometrics , computer science , epistemology , mathematics , artificial intelligence , philosophy , statistics , physics , quantum mechanics
The experimental phenomenon known as ‘probability matching’ is often offered as evidence in support of adaptive learning models and against the idea that people maximise their expected utility. Recent interest in dynamic‐based equilibrium theories means the term re‐appears in Economics. However, there seems to be conflicting views on what is actually meant by the term and about the validity of the data. The purpose of this paper is therefore threefold: First, to introduce today’s readers to what is meant by probability matching, and in particular to clarify which aspects of this phenomenon challenge the utility‐maximisation hypothesis. Second, to familiarise the reader with the different theoretical approaches to behaviour in such circumstances, and to focus on the differences in predictions between these theories in light of recent advances. Third, to provide a comprehensive survey of repeated, binary choice experiments.