Diversity of Experimental Methods in Economics (eBook)

Toshiji Kawagoe, Future University HakodateHirokazu Takizawa, Chuo University

Contents 5
Diversity of Experimental Methods in Economics: An Introduction 7
1 Economics and Experiments 7
2 Vernon Smith’s Market Experiment 9
3 The Rise of Behavioral Economics 10
4 Behavioral Economics, Neuroeconomics and Naturalism 11
5 Behavioral Game Theory 14
6 From Testing Theories to Informing Policies 15
7 Field Experiments and the Identification of Causality 17
8 Looking at Various Experiments as They Arise 19
9 The Structure of the Book 19
References 24
Diversity in Experimental Methods 26
Laboratory Experiments in Game Theory 27
1 A Brief History of Game Experiments 28
2 Some Reflections on the Purposes and Methodology of Market Experiments 29
3 Explanatory Strategies in Experimental Game Theory 32
3.1 Models of Social Preferences 32
3.2 Models of Bounded Rationality 34
4 Dealing with Experimental Results 37
4.1 Treatment Tests 37
4.2 Structural Models 38
4.3 Model Selection Theory 38
5 Conclusion 39
References 40
The Field Experiment Revolution in Development Economics 42
1 Introduction 42
2 The Field Experiment Revolution in Development Economics 43
3 Lab-in-the-Filed Experiment 45
4 Modern Empirical Methods in Economics 47
5 Poverty Trap 52
5.1 Credit Market Failure and Microcredit 54
5.2 Targeting Ultra Poor 56
5.3 Psychological Poverty Trap 57
6 Concluding Remarks 58
References 59
Experimental Research in Political Science 64
1 Introduction 64
2 An Overview of Experimental Studies in Political Science 66
2.1 What Are Experiments in Political Studies? 66
2.2 Methods in Experimental Political Science 67
2.3 Experimental Studies in Political Science 71
2.4 Impacts of Experimental Studies in Psychology and Economics 72
3 Advantages and Disadvantages of Experimental Political Science 72
3.1 Advantages of Experimental Political Science 72
3.2 Disadvantages of Experimental Political Science 74
4 Experiments of Distributive Justice 75
4.1 Student Subjects or General Adult Subjects? 75
4.2 J. Rawls “A Theory of Justice” and Related Experimental Studies 75
4.3 Comparing Student Subjects and Adult Subjects 76
5 Conclusion and Future Directions 80
References 80
Experiments in Psychology: Current Issues in Irrational Choice Behavior 82
1 A Brief Overview of Psychology 83
1.1 What Is Psychology? 83
1.2 Psychological Research Methods 83
2 Behavior Analysis 85
2.1 Overview of Behavior Analysis 85
2.2 Basic Principles of Operant Conditioning 86
2.3 Choice 92
3 Rationality 96
3.1 Rationality in Economics 96
3.2 Rationality in Behavior Analysis 96
4 Self-control 98
4.1 Experimental Paradigm for Self-control 98
4.2 Delay Discounting 99
4.3 Preference Reversal 101
5 Suboptimal Choice 103
5.1 The Study of Kendall (1974) 103
5.2 Studies by Zentall and Colleagues 104
5.3 Suboptimal Choice and Other Behavioral Phenomena 106
6 The Segmentation Effect 106
7 Discussion 109
7.1 The Possibility for Mutual Exchange 109
7.2 Irrational Choice in Behavioral Ecology 111
7.3 Rationality in Hyperbolic Discounting 111
7.4 Irrationality Controlled by Molecular Contingencies 112
References 113
Evolutionary Psychology and Economic Game Experiments 119
1 Introduction 119
2 How Can Human Behaviors Be Adaptive Without Rational Deliberation? 120
2.1 Altruistic Behavior and Kin Selection 120
2.2 Kin Recognition and Kin-Directed Altruism 121
2.3 Role of Emotions in Adaptive Behaviors 122
2.4 Errors Are Inevitable 123
2.5 Kin Selection and the Evolution of Unconditional Cooperation 124
2.6 Summary 125
3 Evolution of “Other-Regarding” Preferences? 125
3.1 Strong Reciprocity as an Explanation of Human Cooperation 125
3.2 Evolution of Strong Reciprocity 126
3.3 Other-Regarding Preferences 127
3.4 Mismatch Hypothesis 128
4 Can the Tit-for-Tat Strategy Explain Human Friendship? 130
4.1 Tit-for-Tat and the Evolution of Dyadic Cooperation 130
4.2 What Psychological Mechanisms Does the Model Predict? 131
4.3 Does TFT Explain the Evolution of Human Friendship? 132
4.4 Less Concern About the Shadow of the Future in Friendship 133
4.5 Risk-Pooling in Uncertain Environments 134
4.6 Summary 135
5 How People Maintain a Good Reputation 136
5.1 Indirect Reciprocity and the Image Scoring Strategy 136
5.2 Problem of the Image Scoring Strategy 137
5.3 Do People Really Use the Standing Strategy? 138
5.4 The Intention Signaling Strategy as an Alternative 139
6 Conclusion 141
References 142
Critical Viewpoints 147
Reconsidering Induced Value Theory 148
1 Introduction 148
2 Methodology of Economic Experiment 150
2.1 Objective of Economic Experiment 150
2.2 On Different Schools of Behavioral Economics 152
3 Pros and Cons with Payment Systems in the Experiment 154
3.1 Motivation 154
3.2 Several Payment Systems 156
3.3 Mechanism Design Approach for Several Payment Systems 159
4 Conclusion 160
References 162
Billions of Dollars Worth of Experiments: Calibrating Clinical Trial Investments 164
1 Bottom Line 165
2 Number of Clinical Trials in North America 165
3 Average Cost of a Clinical Trial in North America 168
4 Summary 175
References 175
New Wine into Old Wineskins? Methodenstreit, Agency, and Structure in the Philosophy of Experimental Economics 177
1 Going Local 178
2 What Policy? Agency, Structure, and History in Appraising Experimental Economics 180
3 Conclusion: On Re-contextualization 181
References 182
Creating Social Ontology: On the Performative Nature of Economic Experiments 184
1 Introduction 184
2 Experiments as Performances 187
3 Performativity and the Principle of Complementarity 191
4 Distributed Cognition and the Production of Social Ontology 198
5 Conclusion 200
References 200