Experimental Economics From the Vantage‐point of Behavioural Economics

Abstract

As a behavioural economist (an economist who brings psychological insights to bear on economic phenomena), preparing a controversy corner piece criticising experimental economics (the use of experimentation to address economic questions) is like working yourself up to enter the boxing ring against a friend. Experimental economics and behavioural economics have much in common. Both groups can trace their origins to psychology psychological theory in one case and experimentation in the other. Both subfields came of age in the last quarter of this century, and have gained growing acceptance within the discipline of economics as measured by almost any criterion: publications in mainstream journals, academic positions in top departments, prominence at meetings, etc.. In the current climate it is easy to forget that only 20 years ago the simple fact that an article reported experiments or discussed psychology was regarded by many editors as grounds for summary rejection. Perhaps more importantly, many behavioural economists (BEs) use economics-style experiments, and some experimental economists (EEs) embrace psychology. Indeed, some researchers would find it difficult to classify themselves into one group or the other, and would be embraced by both groups as one of their own. There is, therefore no inherent conflict between the two approaches; indeed, there is good cause for synergistic coexistence. Nevertheless, there is often value in obtaining another field's perspective on what one does. Some EEs have not been particularly reticent about providing BEs with such input (see, e.g., Smith, 199 1). In this essay I attempt to return the favour in a small way. There are, in fact, many differences between the two subfields, the most important of which is one of basic orientation. BEs are methodological eclectics. They define themselves, not on the basis of the research methods that they employ, but rather their application of psychological insights to economics. In recent published research, BEs are as likely to use field research as experimentation (see, e.g., Camerer et al., 1997; Babcock et al., 1996). EEs on the other hand, define themselves on the basis of their endorsement and use of experimentation as a research tool. Consistent with this orientation, EEs have made a major investment in developing novel experimental methods that are suitable for addressing economic issues, and have achieving a virtual consensus among themselves on a number of important methodological