Experimental Economics

Volume 26, Issue 3, September 2019, Page 177-178.

While the history and methodology of laboratory experiments in economics have been extensively studied by philosophers, those of field experiments have not attracted much attention until recently. What is the historical context in which field experiments have been advocated? And what are the methodological rationales for conducting experiments in the field as opposed to in the lab? This article addresses these questions by combining historical and methodological perspectives. In terms of history, we show that the movement toward field experiments in (...) economics has two distinct roots. One is the general orientation of medical and social sciences to evidence-based policy evaluation, which gave rise to randomized field experiments in economics. The other is an awareness of several methodological limitations of lab experiments in economics, which required practitioners to get out of the lab and into the field. In these senses, the movement is a consequence of influences from both outside and inside economics: the general evidence-based trend in policy science and an internal methodological development of experimental economics. In terms of methodology, we show that these two roots resulted in two somewhat different notions of “external validity” as methodological rationales of field experiment. Finally, we suggest that analysis of experiments as exhibits highlights a methodological strategy in which both strands complement each other. (shrink)

To what use can causal claims established in good policy studies be put? We isolate two reasons inferences from study to target fail. First, policy variables do not produce results on their own; they need helping factors. The distribution of helping factors is likely to be unique or local for each study, so one cannot expect external validity to be all that common. Second, researchers often give too concrete a description of the cause in the study for it to carry (...) over to the target.ion is necessary to get causes that travel. There is no sure-fire way to guard against these problems. But the unavailability of one perfect tool does not imply there are no second best contrivances. Two general pointers for Good Practice in policy advice follow from our diagnosis: focus on the concrete details in the target and use cross discipline heuristics that diversify background knowledge.¿Qué uso podemos hacer de las tesis causales que encontramos en los buenos estudios sobre política aplicada? Distinguimos dos razones por las que pueden fallar las inferencias desde la población en el estudio a la población general. En primer lugar, las variables que usamos en política no generan resultados por sí solas. Necesitan factores coadyuvantes. La distribución de estos factores es probablemente única o local en cada estudio, así que no hay motivos para esperar su validez externa. En segundo lugar, los investigadores a menudo dan descripciones demasiado concretas de la causalidad en el estudio como para poder generalizarlas. La abstracción es necesaria para obtener causas que viajen. No hay ningún modo absolutamente seguro de evitar semejantes fallos. Pero esto no implica que no haya arreglos subóptimos. De nuestro diagnóstico se siguen dos orientaciones generales sobre las buenas prácticas en la asesoría política: concentrémonos en los detalles concretos de la población en la que pretendemos intervenir y usemos heurísticas transdisciplinares que diversifiquen nuestro conocimiento de fondo. (shrink)

Using an economic bargaining game, we tested for the existence of two phenomena related to social norms, namely norm manipulation – the selection of an interpretation of the norm that best suits an individual – and norm evasion – the deliberate, private violation of a social norm. We found that the manipulation of a norm of fairness was characterized by a self-serving bias in beliefs about what constituted normatively acceptable behaviour, so that an individual who made an uneven bargaining offer (...) not only genuinely believed it was fair, but also believed that recipients found it fair, even though recipients of the offer considered it to be unfair. In contrast, norm evasion operated as a highly explicit process. When they could do so without the recipient's knowledge, individuals made uneven offers despite knowing that their behaviour was unfair. (shrink)

Not everything that it's ‘possible’ FOR you to do is something it's ‘possible’ THAT you will do. The compatibilist freedom formula ‘absence of impediments’ must embrace external and internal – including psychological – impediments. Desires are impediments only when they impede, owing to motivational conflict. But other impediments, external or internal, require merely the potential to impede.

Francesco Guala has developed some novel and radical ideas on the problem of external validity, a topic that has not received much attention in the experimental economics literature. In this paper I argue that his views on external validity are not justified and the conclusions which he draws from these views, if widely adopted, could substantially undermine the experimental economics enterprise. In rejecting the justification of these views, the paper reaffirms the importance of experiments in economics.

To understand the human capacity for psychological altruism, one requires a proper understanding of how people actually think and feel. This paper addresses the possible relevance of recent findings in experimental economics and neuroeconomics to the philosophical controversy over altruism and egoism. After briefly sketching and contextualizing the controversy, we survey and discuss the results of various studies on behaviourally altruistic helping and punishing behaviour, which provide stimulating clues for the debate over psychological altruism. On closer analysis, these studies prove (...) less relevant than originally expected because the data obtained admit competing interpretations – such as people seeking fairness versus people seeking revenge. However, this mitigated conclusion does not preclude the possibility of more fruitful research in the area in the future. Throughout our analysis, we provide hints for the direction of future research on the question. (shrink)

Much of the methodological discussion around experiments in economics and other social sciences is framed in terms of the notions of internal and external validity. The standard view is that internal validity and external validity stand in a relationship best described as a _trade-off_. However, it is also commonly held that internal validity is a _prerequisite_ to external validity. This article addresses the problem of the compatibility of these two ideas and analyzes critically the standard arguments about the conditions under (...) which a trade-off between internal and external validity arises. Our argument stands against common associations of internal validity and external validity with the distinction between field and laboratory experiments and assesses critically the arguments that link the artificiality of experimental settings done in the laboratory with the purported trade-off between internal and external validity. We conclude that the idea of a trade-off or tension between internal and external validity seems, upon analysis, far less cogent than its intuitive attractiveness may lead us to think at first sight. (shrink)

The adequacy of currently popular accounts of the genetic basis for psychological altruism, including inclusive fitness, reciprocal altruism, sociality, and group selection, is questioned. Problems exist both with the evidence cited as supporting these accounts and with the relevance of the accounts to what is being explained. Based on the empathy-altruism hypothesis, a more plausible account is proposed: generalized parental nurturance. It is suggested that four evolutionary developments combined to provide a genetic basis for psychological altruism. First is the evolution (...) in mammals of parental nurturance. Second is the evolution in humans of the ability to see others as sentient, intentional agents and, thereby, to recognize other's needs, even subtle ones. Third is the evolution in humans of tender, empathic emotions as an important component of parental nurturance. Fourth is the evolution in humans of cognitive capacities that make it possible to generalize tender, empathic feelings and, thereby, altruism beyond offspring. (shrink)

This paper responds to Gui and Nelson's separate comments on our paper ‘Fraternity’, which analysed sociality in markets as joint commitment to mutual assistance. We argue that our analysis is fundamentally different both from Nelson's analysis and from that provided by theories of warm glow or guilt aversion, as discussed by Gui. We agree with Gui that, in initiating and maintaining cooperative relationships, individuals sometimes incur personal costs to benefit others without any certainty of reciprocation, but we argue that the (...) intentions underlying such actions are cooperative rather than self-sacrificing. (shrink)

Numerous accounting and economics research studies employ an experimental research method requiring student participants to make representations about an individual characteristic that provides a basis for payment of cash rewards. In response, many participants intentionally misrepresent the nature of that characteristic to receive a greater reward. Typically, such studies are deemed to be either exempt from review by institutional review boards or subject only to an expedited review. Moreover, investigators seldom debrief participants, purportedly to avoid contamination of the participant pool. (...) The authors question the ethics of inducing strategic misrepresentation and rewarding fraudulent behavior without appropriate debriefing. A theoretical framework of cognitive ethical development indicates that such research methods can be harmful to student participants. Furthermore, principles of operant conditioning suggest that the rewards reinforce fraudulent behavior. It is recommended that research studies inducing strategic misrepresentation should not be exempt from IRB review and should be required to include desensitization procedures for debriefing participants. (shrink)

As an emerging discipline, neuroeconomics faces considerable methodological and practical challenges. In this paper, I suggest that these challenges can be understood by exploring the similarities and dissimilarities between the emergence of neuroeconomics and the emergence of cognitive and computational neuroscience two decades ago. From these parallels, I suggest the major challenge facing theory formation in the neural and behavioural sciences is that of being under-constrained by data, making a detailed understanding of physical implementation necessary for theory construction in neuroeconomics. (...) Rather than following a top-down strategy, neuroeconomists should be pragmatic in the use of available data from animal models, information regarding neural pathways and projections, computational models of neural function, functional imaging and behavioural data. By providing convergent evidence across multiple levels of organization, neuroeconomics will have its most promising prospects of success. (shrink)

We argue that neuroeconomics should be a mechanistic science. We defend this view as preferable both to a revolutionary perspective, according to which classical economics is eliminated in favour of neuroeconomics, and to a classical economic perspective, according to which economics is insulated from facts about psychology and neuroscience. We argue that, like other mechanistic sciences, neuroeconomics will earn its keep to the extent that it either reconfigures how economists think about decision-making or how neuroscientists think about brain mechanisms underlying (...) behaviour. We discuss some ways that the search for mechanisms can bring about such top-down and bottom-up revision, and we consider some examples from the recent neuroeconomics literature of how varieties of progress of this sort might be achieved. (shrink)

The goal of neuroeconomics is a mathematical theory of how the brain implements decisions, that is tied to behaviour. This theory is likely to show some decisions for which rational-choice theory is a good approximation, to provide a deeper level of distinction among competing behavioural alternatives, and to provide empirical inspiration for economics to incorporate more nuanced ideas about endogeneity of preferences, individual difference, emotions, endogeneous regulation of states, and so forth. I also address some concerns about rhetoric and practical (...) epistemology. Neuroscience articles are necessarily speculative and the science has proceeded rapidly because of that rhetorical convention. Single-study papers are encouraged and are necessarily limited in what can be inferred, so the sturdiest cumulation of results, and the best guide forward, comes in review journals which compile results and suggest themes. The potential of neuroeconomics is in combining the clearest experimental paradigms and statistical methods in economics, with the unprecedented capacity to measure a range of neural and cognitive activity that economists like Edgeworth, Fisher and Ramsey daydreamed about but did not have. (shrink)

Understanding more about how the brain functions should help us understand economic behaviour. But some would have us believe that it has done this already, and that insights from neuroscience have already provided insights in economics that we would not otherwise have. Much of this is just academic marketing hype, and to get down to substantive issues we need to identify that fluff for what it is. After we clear away the distractions, what is left? The answer is that a (...) lot is left, but it is still all potential. That is not a bad thing, or a reason to stop the effort, but it does point to the need for a serious reconsideration of what neuroeconomics is and what passes for explanation in this literature. I argue that neuroeconomics can be a valuable field, but not the way it is being developed and “sold” now. The same is true more generally of behavioural economics, which shares many of the methodological flaws of neuroeconomics. (shrink)

Neuroeconomics focuses on brain imaging studies mapping neural responses to choice behaviour. Economic theory is concerned with choice behaviour but it is silent on neural activities. We present a game theoretic model in which players are endowed with an additional structure – a simple “nervous system” – and interact repeatedly in changing games. The nervous system constrains information processing functions and behavioural functions. By reinterpreting results from evolutionary game theory, we suggest that nervous systems can develop to “function well” in (...) exogenously changing strategic environments. We present an example indicating that an analogous conclusion fails if players can influence endogenously their environment. (shrink)

Neuroeconomics is the newest of the economic sciences with a focus on how the embodied human brain interacts with its institutional and social environment to make economic decisions. This paper presents an overview of neuroeconomics methods and reviews a number of results in this emerging field of study.

Neuroscience can contribute to economics by inspiring new models, helping to distinguish models that have similar implications for readily available data, and guiding interpretations of decision-making processes by policy-makers. However, there is an additional less straightforward role for it to play: augmenting, along with survey data and other non-revealed-preference sources, assessments of well-being. The need for such augmentation lies in the slightly bizarre stance taken by modern economic theory, namely that economics is concerned only with choices and not with welfare (...) per se. It is shown that this is neither historical nor at all necessary, even within the standard paradigm. Although neuroscience is by no means a panacea for determining true utility, which ultimately remains a subjective concept, it provides a uniquely useful complementary dataset. (shrink)

A driving force behind much of the literature on the non-identity problem is the widely shared intuition that actions or policies that change who comes into existence don't, as a result, lose their morally problematic features. We hypothesize that this intuition isn’t entirely shared by the general public, which might have widespread implications concerning how to best motivate public support for large-scale, identity-affecting policies like those involved in climate change mitigation. To test our hypothesis, we ran a behavioural economic experiment, (...) a version of the well-known dictator game, designed to mimic the public's morally loaded behaviour in identity-affecting choice problems. As predicted, we found that the public does seem to behave more selfishly when making identity-affecting choices. We further hypothesised that one possible mechanism involved in this change is the notion of harm that plays a role in the public’s normatively loaded decision making. So, during our study, we also solicited subjects’ attitudes about harm, in particular about whether the “dictators” had done harm through their choices. The data suggest that substantial portions of the population each employ distinct notions of harm in their normative thinking, which raises some puzzling features about the public’s normative thinking that call out for further empirical examination. (shrink)

James's Fairness in Trade seeks to offer an account of fair trade that is “internal” to an existing practice he describes as “mutual market reliance.” This paper distinguishes several senses of the distinction between “internal” and “external” that occur in the book and asks how, in its various senses, the distinction shapes and influences judgments about the fairness of the practice.

The use of high hypothetical payoffs has been justified by the realism and relevance of large monetary consequences and by the impracticality of making high cash payments. We argue that subjects may not be able to imagine how they would behave in high payoff situations.

Gigerenzer’s ‘external validity argument’ plays a pivotal role in his critique of the heuristics and biases research program (HB). The basic idea is that (a) the experimental contexts deployed by HB are not representative of the real environment and that (b) the differences between the setting and the real environment are causally relevant, because they result in different performances by the subjects. However, by considering Gigerenzer’s work on frequencies in probability judgments, this essay attempts to show that there are fatal (...) flaws in the argument. Specifically, each of the claims is controversial: whereas (b) is not adequately empirically justified, (a) is inconsistent with the ‘debiasing’ program of Gigerenzer’s ABC group. Therefore, whatever reason we might have for believing that the experimental findings of HB lack experimental validity, this should not be based on Gigerenzer’s version of the argument. (shrink)

External validity is typically regarded as the downside of case study research by methodologists and social scientists; case studies, however, are often aimed at drawing lessons that are generalizable to new contexts. The gap between the generalizability potential of case studies and the research goals demands closer scrutiny. I suggest that the conclusion that case study research is weak in external validity follows from a set of assumptions that I term the "traditional view," which are disputable at best. In this (...) view, external validity is treated as a matter of mere representativeness. I argue that it is best understood instead as a problem of inference and that the emphasis should be placed on the comparability of the study rather than on the typicality of the case. By making case studies highly comparable, their external validity can be reliably and efficiently assessed and, in this way, their generalizability potential enhanced. (shrink)

The paper is focused upon the relations of key inside stakeholders—managers and employees whose interests are supposed to be represented by trade unions while shaping internal CSR practices. It discusses real, perceived and desired role of TU in the process and the outcomes of internal CSR in the fields of work related security and access to social benefits. It is demonstrated that the internal social policy of corporate management pursues pragmatic goals seeking the least costly way to compete for skilled (...) manpower and accumulate human capital. The role of TU is chiefly limited to assisting the management in distribution of social benefits. As a result the benefit distribution contributes to social inequality patterns inside corporation. It is safe to conclude that so far the internal CSR patterns in Russia are formed under a mixture of pragmatic and paternalistic reasons with minor traces of social dialogue. (shrink)