Research In Experimental Economics Research Articles

EXPERIMENTAL ECONOMY AND SOCIAL ENGINEERING: COMMON AND DIFFERENT

The last 30-50 years of the development of economic science were marked by the rapid development of new directions of research, and interdisciplinary, which today is increasingly entering the social sciences, only strengthened this trend. Behavioral economics, global political economy, experimental economics, social engineering, information economics, post-industrial economics, etc. In particular, global institutional changes, the Covid-19 pandemic and the war with Russia led to the actualization of the concept of "social engineering" in the domestic socio-economic and political space, and the results of experimental economics research are actively used not only in fundamental and theoretical research, but also in real economic practice. which unfolds the status of economic science in a completely different way - economics becomes a truly empirical science. The article examines theoretical and methodological aspects of experimental economics and social engineering. The content of the "social engineering" category was clarified, a comparative analysis of approaches was carried out, and the methodological principles of theimplementation of social engineering were determined. Thus, it was found that the vast majority of domestic scientists consider social engineering from the standpoint of a system of constructing a new social reality, a specific social practice of managing industrial objects, and an experimental technology for changing social life. Experimental economics, as one of the newest directions of economic science, is analyzed in the context of key studies of Nobel laureates, representatives of experimental economics. Despite certain similarities between social engineering and experimental economics, the authors conducted a critical analysis of these two directions, identified fundamental differences in approaches, limits, and opportunities of each.

Імітаційні технології експериментальної економіки

The article presents simulation technologies as an instrumental base for research in experimental economics. The main goals and objectives of modern experimental economics are considered. Attention focused on the study of markets and market structures, as one of the relevant areas of experimentation. A generalized overview of classic simulation models of the market is given. A competitive market model presented on the example of two product variants developed using system-dynamic and agent simulation paradigms on the AnyLogic system software platform. On the basis of the model, a study of user behavior in the market of household electrical products was conducted. The obtained results are illustrated by fragments of model simulation experiments.

Основи на съвременната икономика: Мансър Олсън и колективното действие

Mancur Olson (1932-1998) became famous with one great idea: the failure of collective action. Since interest groups provide their members with public (collective) goods with corresponding externalities, he assumed that free riding as a rational individual strategy would be a ubiquitous problem hampering the realization of efficient collective action in the provision of such goods. This remarkable idea – the application of methodological individualism and the assumption of rational individual behavior in the analysis of interest groups, provided a fertile ground for theory building in all social sciences, most notably in political science. In the field of economics, Olson’s ideas contributed to the establishment of the Public Choice Theory and became a prerequisite for fundamental research in experimental economics – on public goods, voluntary contribution mechanisms and games such as the prisoner dilemma. The present paper briefly discusses his two best-known books.

Loss Aversion and Health Behaviors: Results from Two Incentivized Economic Experiments.

Experimental research in health economics has analyzed the effects of economic preference parameters such as risk attitude and time preference on the probability of adopting risky health behaviors. However, the existing evidence is mixed and previous research often fails to include controls for other determinants of health behaviors such as personality traits. The aim of this research is to analyze the relationships between an incentivized measure of loss aversion and three health behaviors: smoking, binge drinking, and engaging in physical activity. Loss aversion is a preference measure that has been derived from prospect theory as an alternative approach to analyze decision-making under risk, such as the decision to invest in health capital, and has never been used in an analysis of the determinants of health behaviors before. Using two experimental samples of college students in the Republic of Korea and the United States of America, and controlling for Big Five personality traits and a host of individual-level control variables, there are no statistically significant relationships between loss aversion and the three aforementioned health behaviors, but relationships for Big Five conscientiousness, extraversion, agreeableness, and neuroticism. A candidate explanation might be lack of domain independence for loss aversion. Differences between the Korean and the US samples indicate the possibility of intercultural differences.

Rejecting rejections—seeking acceptance of experimental economics in economics journals

Abstract This paper addresses a central question of the experimental turn in economics: how a relatively small group of experimental economists in the 1970s and 1980s managed to convince editors and referees of leading economics journals of the merits of the experimental method. The consequence of this was that, by the early 1990s, experimental economics research became a standard feature of economics journals and of the economics mainstream. I draw on a unique—and, to this date, never utilized—corpus of referee reports (and related correspondence) by Charles Plott, one of the leading pioneers of experimental economics. His publication corpus is used as a case study of how experimental economists sought acceptance in economics journals. I describe a set of nine strategies that he and other early experimental economists used to convince journal editors and referees who had no direct experience with conducting economic experiments of the merits of the experimental method.

Rejecting Rejections — Seeking Acceptance of Experimental Economics in Economics Journals

This paper addresses a central question of the experimental turn in economics: how a relatively small group of experimental economists in the 1970s and 1980s managed to convince editors and referees of leading economics journals of the merits of the experimental method with the consequence that by the early 1990s experimental economics research became a standard feature of economics journals and of the economics mainstream. I draw on a unique and to this date never utilized corpus of referee reports and related correspondence of Charles Plott, one of the leading pioneers of experimental economics. His publication corpus is used as a case study of how experimental economists sought acceptance in economics journals. I describe a set of nine strategies that he and other early experimental economists used to convince journal editors and referees who did not have any direct experience with conducting economic experiments of the merits of the experimental method.

Asymmetric Learning from Prices and Post‐Earnings‐Announcement Drift

ABSTRACTMotivated by research in psychology and experimental economics, we assume that investors update their beliefs about an asset's value upon observing the price, but only when the price clearly reveals that others obtained private information that differs from their own private information. Specifically, we assume that investors learn from the price of an asset in an asymmetric manner—they learn from the price if they observe good (bad) private information and the price is worse (better) than what is justified based on public information alone. We show that asymmetric learning from an asset's price leads to post‐earnings‐announcement drift (PEAD), and that it generates arbitrage opportunities that are less attractive than alternative explanations of PEAD. In addition, our model predicts that PEAD will be concentrated in earnings surprises that are not dominated by accruals, and it also predicts that earnings response coefficients will decline in the magnitude of the earnings surprises.

Behavioral and Experimental Agri-Environmental Research: Methodological Challenges, Literature Gaps, and Recommendations

Insights from behavioral and experimental economics research can inform the design of evidence-based, cost-effective agri-environmental programs that mitigate environmental damages and promote the supply of environmental benefits from agricultural landscapes. To enhance future research on agri-environmental program design and to increase the speed at which credible scientific knowledge is accumulated, we highlight methodological challenges, identify important gaps in the existing literature, and make key recommendations for both researchers and those evaluating research. We first report on four key methodological challenges—underpowered designs, multiple hypothesis testing, interpretation issues, and choosing appropriate econometric methods—and suggest strategies to overcome these challenges. Specifically, we emphasize the need for more detailed planning during the experimental design stage, including power analyses and publishing a pre-analysis plan. Greater use of replication studies and meta-analyses will also help address these challenges and strengthen the quality of the evidence base. In the second part of this paper, we discuss how insights from behavioral and experimental economics can be applied to improve the design of agri-environmental programs. We summarize key insights using the MINDSPACE framework, which categorizes nine behavioral effects that influence decision-making (messenger, incentives, norms, defaults, salience, priming, affect, commitment, and ego), and we highlight recent research that tests these effects in agri-environmental contexts. We also propose a framework for prioritizing policy-relevant research in this domain.

The False Consensus Effect and Trading Around Earnings Announcements

Motivated by research in psychology and experimental economics, we assume that investors update their beliefs about assets' values upon observing the equilibrium price, but only when the price clearly reveals that others inferred private information that differs from their own private information. We examine the implications of this form of learning from price in the context of trade around earnings announcements. We show that asymmetric learning from price results in post-earnings announcement drift, but only among firms whose earnings are expected (ex ante) to be persistent.

The Behavioral Economics of Artificial Intelligence: Lessons from Experiments with Computer Players

Artificial intelligence (AI) is starting to pervade the economic and social life rendering strategic interactions with artificial agents more and more common. At the same time, experimental economic research has increasingly employed computer players to advance our understanding of strategic interaction in general. What can this strand of research teach us about an AI-shaped future? I review 90 experimental studies using computer players. I find that, in a nutshell, humans act more selfishly and more rational in the presence of computer players, and they are often able to exploit these players. Still, many open questions prevail.

ALGORITHMS, MACHINE LEARNING, AND COLLUSION

AbstractThis paper discusses whether self-learning price-setting algorithms can coordinate their pricing behavior to achieve a collusive outcome that maximizes the joint profits of the firms using them. Although legal scholars have generally assumed that algorithmic collusion is not only possible but also exceptionally easy, computer scientists examining cooperation between algorithms as well as economists investigating collusion in experimental oligopolies have countered that coordinated, tacitly collusive behavior is not as rapid, easy, or even inevitable as often suggested. Research in experimental economics has shown that the exchange of information is vital to collusion when more than two firms operate within a given market. Communication between algorithms is also a topic in research on artificial intelligence, in which some scholars have recently indicated that algorithms can learn to communicate, albeit in somewhat limited ways. Taken together, algorithmic collusion currently seems far more difficult to achieve than legal scholars have often assumed and is thus not a particularly relevant competitive concern at present. Moreover, there are several legal problems associated with algorithmic collusion, including questions of liability, of auditing and monitoring algorithms, and of enforcing competition law.

Monetary payoffs and utility in laboratory experiments

Experimental research in economics relies on performance-dependent monetary incentives to implement theoretical games in the laboratory. While the set of players and the set of strategies of those games are unambiguously defined and controlled by the experimenter, utility is typically either assumed to coincide with monetary payoffs or is estimated ex post based on observed actions. We follow a different path and discuss results from an experiment on simple 2-person games in which participants were repeatedly asked to report their expectations on the opponent’s behavior and their own level of satisfaction for each possible outcome of the game. This approach allows us to reflect on experimental methodology by directly comparing monetary incentives with (perceived and declared) utility. We find that, albeit helpful, repetition and experience are unable to completely align utility with monetary incentives. While most participants (57%) seek to maximize money earnings in the experimental laboratory and tend to perceive the games in the intended way, a small – yet non-negligible – fraction (27%) of the subject pool consistently interprets the game and, therefore, acts in an unexpected way.

The Hypothesis Platform: An Online Tool for Experimental Research into Work with Maps and Behavior in Electronic Environments

The article presents a testing platform named Hypothesis. The software was developed primarily for the purposes of experimental research in cartography and psychological diagnostics. Hypothesis is an event-logger application which can be used for the recording of events and their real-time processing, if needed. The platform allows for the application of Computerized Adaptive Testing. The modularity of the platform makes it possible to integrate various Processing.js-based applications for creation and presentation of rich graphic material, interactive animations, and tasks involving manipulation with 3D objects. The Manager Module allows not only the administration of user accounts and tests but also serves as a data export tool. Raw data is exported from the central database in text format and then converted in the selection module into a format suitable for statistical analysis. The platform has many functions e.g., the creation and administration of tasks with real-time interaction between several participants (“multi-player function”) and those where a single user completes several tests simultaneously (“multi-task function”). The platform may be useful e.g., for research in experimental economics or for studies involving collaborative tasks. In addition, connection of the platform to an eye-tracking system is also possible.

Are multi-criteria decision-making tools useful? An experimental comparative study of three methods

Many decision makers still question the usefulness of multi-criteria decision-making methods and prefer to rely on intuitive decisions. In this study we evaluated a number of multi-criteria decision-making tools for their usefulness using incentive-based experiments, which is a novel approach in operations research but common in psychology and experimental economics. In this experiment the participants were asked to compare five coffee shops to win a voucher for their best-rated shop. We found that, although the usefulness of different multi-criteria decision-making tools varied to some extent, all the tools were found to be useful in the sense that, when they decided to change their ranking, they followed the recommendation of the multi-criteria decision-making tool. Moreover, the level of inconsistency in the judgements provided had no significant effect on the usefulness of these tools.

On economics as a physical science

This paper proposes a new interpretation of the subject matter and evaluates it in terms of recent research trends in the discipline of Economics. Instead of applying physical laws and trying to isolate cases where they work in Economics we must look for robust results in Economic theory that hold across space and time. This tends to mimic natural or physical laws. The paper suggests examples where it can be done. Recent trends in experimental research in Economics take the discipline away from order and uniformity and make it distant from physical research. While this is fruitful, search for robust results is a necessity for universal policy making and also for establishing the physical identity of the discipline.

Allocating Airport Slots - The History of Early Applied Experimental Research

The aviation industry changed dramatically in the wake of the Airline Deregulation Act of 1978. My paper looks at an element of this transformation – the policy according to which take off and landing slots were allocated at congested airports including a proposal to change this policy – an issue that affected millions of passengers annually. Caltech economists and experimentalists David Grether, Mark Isaac and Charles Plott were hired by the Civil Aviation Board to study the existing slot scheduling committees that used unanimity voting rule as well as alternative slot allocation mechanisms. I use their study to trace and depict the emerging practice of applied experimental research as a multilayered endeavor which involves an interplay among theoretical, empirical, and practical considerations (akin to economic modeling) that allows the experimenter to move from the naturally occurring phenomenon to its study in a laboratory only to return back with a policy recommendation. This demonstrates that applied experimental economics research went hand in hand with the emergence and rise of experimental economics in the 1980s.

Giving is a Question of Time: Response Times and Contributions to an Environmental Public Good

Does it matter whether contribution decisions regarding environmental public goods are arrived at through intuition or reflection? Experimental research in behavioral economics has recently adopted dual-system theories of the mind from psychology in order to address this question. This research uses response time data in public good games to distinguish between the two distinct cognitive processes. We extend this literature towards environmental public goods by analyzing response time data from an online experiment in which over 3400 subjects from the general population faced a dichotomous choice between receiving a monetary payment or contributing to climate change mitigation efforts. Our evidence confirms a strong positive link between response times and contributions: The average response time of contributors is 40 % higher than that of non-contributors. This suggests that reflection, not intuition, is at the root of pro-environmental contributions. This result is robust to a comprehensive set of robustness checks, including a within-subjects analysis that controls for potentially unobserved confounds and recovers the relationship at the individual level.

Experimental Economics: Economic and Game Theoretic Principles in Experimental Research in the Social Sciences

Understanding individual and social decisions and how they are affected by the environment and institutional constraints is at the heart of the the social sciences. With the exception of psychology, traditionally in the social sciences empirical evidence is gathered via happenstance data. Such data are plagued with endogeneity problems and unobserved variables which make it difficult to draw causal inferences and reliably test theories. In the last thirty years laboratory experiments are increasingly adopted, especially in economics. Experimental economics research is often based on formal economic or game theoretical models with clear-cut rules which allow unambiguous inferences from changes in environmental variables. This model-based approach is tightly linked to two principles of experimental economics: the use of task related (monetary) incentives and the proscription of deception. Experimental economics plays an important role in theory and model falsification as well as in digging up behavioral regularities in individual and interactive decision making. Research in experimental economics was instrumental in the development of new models of other-regarding preferences, boundedly rational reasoning, adaptive learning, and ‘noisy’ equilibrium models. The toolbox of economics experiments informs research in decision neuroscience and is also applied in many other fields of the social sciences. Undoubtedly, experimental economics will continue to challenge newly emerging models and suggest new theories of human behavior and keep on to significantly contribute to knowledge in the social sciences.

Experimental Research on Labor Market Discrimination

Understanding whether labor market discrimination explains inferior labor market outcomes for many groups has drawn the attention of labor economists for decades— at least since the publication of Gary Becker’s The Economics of Discrimination in 1957. The decades of research on discrimination in labor markets began with a regression-based “decomposition” approach, asking whether raw wage or earnings differences between groups—which might constitute prima facie evidence of discrimination—were in fact attributable to other productivity-related factors. Subsequent research—responding in large part to limitations of the regression-based approach—moved on to other approaches, such as using firm-level data to estimate both marginal productivity and wage differentials. In recent years, however, there has been substantial growth in experimental research on labor market discrimination—although the earliest experiments were done decades ago. Some experimental research on labor market discrimination takes place in the lab. But far more of it is done in the field, which makes this particular area of experimental research unique relative to the explosion of experimental economic research more generally. This paper surveys the full range of experimental literature on labor market discrimination, places it in the context of the broader research literature on labor market discrimination, discusses the experimental literature from many different perspectives (empirical, theoretical, and policy), and reviews both what this literature has taught us thus far, and what remains to be done. (JEL C93, J14, J15, J16, J23, J41, J71)

Which Deceptive Practices, If Any, Should Be Allowed in Experimental Economics Research? Results from Surveys of Applied Experimental Economists and Students

Deceptive experimental practices are banned in some professions but are standard in others. Recently, the journals of the Agricultural and Applied Economics Association introduced guidelines that allow researchers to publish articles that use some forms of deception. However, in their present form, these guidelines leave room for interpretation. This situation is not ideal for researchers, and a clearer definition of which deceptive practices should be banned could be beneficial. Our aim is to help provide greater clarity and potential guidance for journal policies regarding deception by using the results of surveys of both researcher and student subjects. Evaluating ten potentially deceptive experimental techniques, we find consistent support for banning certain practices while allowing others.