Anomalies : confrontation between economic theory and economic experiments

Abstract

This thesis discusses some of the anomalies observed in economics in general. Anomalies are classified as behavior that is contradictory to utility theory and/or Nash equilibrium behavior. The thesis reviews an experiment and classifies some of the anomalies detected through the experiment. The experiment is based on a two stage R&D game, allowing firms to cooperate in R&D. Risk is introduced for the firms through random variables. This thesis looks at models that can be used to explain anomalies. Most successful were the models allowing loss aversion and risk aversion when subjects cooperate in R&D. On the other hand, the attempts were less successful in most cases where subjects did not cooperate in R&D.