NATURALLY OCCURRING PREFERENCES AND GENERAL EQUILIBRIUM: A LABORATORY STUDY

We examine whether economies constructed using experimentally measured preferences (for risk) tend to suffer from aggregation pathologies (like nonexistence and multiplicity of equilibrium) cautioned by the Sonnenschein–Mantel–Debreu theorem. show that should be expected arise frequently in homogeneous exchange economies, but dwindle eventually disappear as grow diverse. When subjects actually trade, general equilibrium predictions are accurate most cases, failures occur only a priori classified fragile preference instability. Our study uses individual-level experimental data address longstanding questions theory unanswerable prior methods.