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Sociality and external validity in experimental economics

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Abstract

It is sometimes argued that experimental economists do not have to worry about external validity so long as the design sticks closely to a theoretical model. This position mistakes the model for the theory. As a result, applied economics designs often study phenomena distinct from their stated objects of inquiry. Because the implemented models are abstract, they may provide improbable analogues to their stated subject matter. This problem is exacerbated by the relational character of the social world, which also sets epistemic limits for the social science laboratory more generally.

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Notes

  1. Games in this sense can be informally defined as situations in which two or more individuals interact knowingly with each other. See Hargreaves Heap et al. (1992, Chap. 7) for an introduction. Applied economics is the use of general economic principles and theories, such as decision- and game- theory to study specific settings and situations.

  2. The other formulations sometimes refer to more inductively-oriented designs; I do not treat these separately as I doubt that there is a clear distinction in practice between theory testing and inductive exercises.

  3. Bardsley et al. (2010, Chap. 5) argue that the relationship between theory and (formal) model can be clarified if we represent the theory as the claim MCx, where M denotes the formal model propositions, x is the economic domain of interest and C specifies the kind of relationship alleged to obtain between the two, which could be, for example, either realist or instrumentalist in character.

  4. It is not my intention to deny the importance of experimental control, nor of the importance of theory to experimentation, as urged for example by Deaton (2009). But neither control nor attention to theory should not be equated with implementing models. This follows straightforwardly from the distinction drawn in Sect. 2 between theories and models.

  5. At least, not without the involvement of the judicial system. If the exercise did satisfy the criteria for being a real trial it would no longer be purely experimental, as participants could be convicted and fined or imprisoned.

  6. An RCT is a design in which the experimental control is achieved by random allocation to treatment. The rationale of RCTs is that in a large enough sample, randomisation guarantees control on all characteristics, whether observed or not. Laboratory economics experiments tend to use smaller samples than medicinal trials where the RCT method originates from, but nonetheless tend to follow the protocol of random allocation to treatment. It is worth noting that medical experts often recommend minimisation as an alternative to randomisation when sample sizes are small, that is, minimising the differences on observed sample characteristics between treatments (Treasure and MacRae 1998). This procedure may merit adoption in behavioural experiments.

  7. Public goods in the economics literature are ones which are non-rival (more for you does not mean less for me) and non-excludable (you cannot be stopped from consuming even if you do not pay). They give rise to collective action problems. There is an enormous experimental economics literature on public goods; for an entrée see Croson (2008).

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Acknowledgments

Comments from participants at the 2008 Research Methods Festival at St Catherine’s College, University of Oxford, and from anonymous referees, are gratefully acknowledged.

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  1. School of Agriculture, Policy and Development, University of Reading, Reading, UK

    Nicholas Bardsley

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  1. Nicholas Bardsley
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Bardsley, N. Sociality and external validity in experimental economics. Mind Soc 9, 119–138 (2010). https://doi.org/10.1007/s11299-010-0075-0

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