Psychology Dictionary of ArgumentsHome
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| Experiment: artificial bringing about of an event or artificial creation of a state for testing a hypothesis. Experiments can lead to the reformulation of the initial hypotheses and the reformulation of theories. See also theories, measuring, science, hypotheses, Bayesianism, confirmation, events, paradigm change, reference systems._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Experimental Economics on Experiments - Dictionary of Arguments
Parisi I 82 Experiments/Experimental economics/Sullivan/Holt: The capacity to study economic experiments at different scales of observation provides the researcher with a powerful analytical tool. Scaled observation: One way to interpret the different scales of observation is to consider the different uses of experiments for thinking inside and outside the box. A researcher uses economic experiments to look inside the box when value induction, control over institutional structure, and low-level measurement of behavior are used to study concepts not readily observable in the outside world. Another way experiments are used to look inside the box is in the study of activities that are difficult to observe outside the laboratory. Examples include price collusion (because it is illegal) or strategic discussions of bidding strategies (because they are often based on proprietary ideas and information). Parisi I 83 Neuroeconomic experiments: Deeper yet, neuroeconomic experiments measure brain activity in precise spatial and temporal dimensions in order to explore low-level properties of the decision-making process. Cooperators, for example, tend to show greater activity in areas of the brain associated with social situations and visualization than is the case for people who choose self-serving options in experimental trust games (McCabe et al., 2001)(1). Bargaining: In bargaining experiments, areas of the brain associated with emotion are strongly activated when inequitable offers are received, and these areas again activate when such offers are rejected (Sanfey et al., 2003)(2).* Macro scale: at a more macro scale of observation, economic experiments can be used to think outside the box by considering rules and policies that have yet to be implemented. This approach to experimentation has been particularly fruitful in guiding the design of new types of auctions for fishing rights, emissions permits, or combinations of frequency bands in spectrum auctions. >Auctions/Holt. Policies: On the policy side, a relevant example is the use of experimental control to evaluate proposed (but not yet implemented) changes in litigation procedures designed to promote the early settlements of tort claims (Sullivan, 2011)(4). ((s) Cf. >Information/Arrow, >Information economics/Akerlof.) Causality/causal inference: (...) instead of conducting experiments with hundreds of subjects who interact with each other in one large group, most researchers break experiments into separate groups or sessions conducted with smaller subsets of the subject population. Within a session, decision-making and interaction opportunities are often repeated over many rounds. Legal scenarios: (...) many legal scenarios may be better viewed as single-round experiences without opportunities for repeated interaction between individuals. Parisi I 84 Problems: (...) behavior in later stages of a decision process may be affected by the outcomes of random events observed earlier. To a lesser extent, this same concern afflicts observations averaged at the round level, because multi-round experiments leave open the possibility that observed behavior will be affected by experience in prior rounds. Example: A person who encounters cooperative partners in a series of >prisoner’s dilemma games, for example, would presumably be more likely to cooperate in later rounds of the same experiment; “defection” is likewise highly contagious in a series of prisoner’s dilemma pairings.** For experiments on legal institutions: >Settlement bargaining/Experimental economics; for in-court-bargaining see >Jurisdiction/Experimental economics. * See Chorvat, McCabe, and Smith (2005)(3) for a thoughtful discussion of the implications of neuroeconomics for traditional areas of law and economics scholarship. ** For a survey of prisoner's dilemma experiments in which people can choose who to be paired with and who to avoid, see Holt, Johnson, and Schmidtz (2015)(5). 1. McCabe, K., D. Houser, L. Ryan, V. Smith, and T. Trouard (2001). “A functional imaging study of cooperation in two-person reciprocal exchange.” Proceedings of the National Academy of Sciences of the United States of America 98(20): 11832–11835. 2. Sanfey, A. G., J. K. Rilling, J. A. Aronson, L. E. Nystrom, and J. D. Cohen (2003). “The Neural Basis of Economic Decision-Making in the Ultimatum Game.” Science 300(5626): 1755–1758. 3. Chorvat, T. K. McCabe, and V. Smith (2005). “Law and neuroeconomics.” Supreme Court Economic Review 13: 35–62. 4. Sullivan, S. P. (2011). An Experimental Study of Settlement Delay in Pretrial Bargaining with Asymmetric Information. Dissertation: University of Virginia, UMI Pub. No. 3501713. 5.Holt, C. A., C. Johnson, and D. Schmidtz (2015). “Prisoner’s Dilemma Experiments,” in M. Peterson, ed., The Prisoner’s Dilemma, 243–246. Cambridge: Cambridge University Press. Sullivan, Sean P. and Charles A. Holt. „Experimental Economics and the Law“ In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press. - - - Parisi I 93 Experiments/Experimental economics/Sullivan/Holt: [an] observation in economics experiments is the general inability of informed subjects to introspectively reproduce the judgments of relatively uninformed subjects, even when incentivized to do so - a phenomenon termed the curse of knowledge (Camerer, Loewenstein, and Weber, 1989(1)). Hindsight bias/experiments: Unfortunately, substantial experimental evidence indicates that people are not very good at this type of ex post assessment of ex ante probabilities. A particularly uncomfortable problem is hindsight bias - the tendency of people who observe the outcome of a random event to overstate the ex ante probability of that outcome’s occurrence (Fischhoff, 1975(2); Slovic and Fischhoff, 1977(3)). Information asymmetry/introspection: A closely related observation in economics experiments is the general inability of informed subjects to introspectively reproduce the judgments of relatively uninformed subjects, even when incentivized to do so - a phenomenon termed the curse of knowledge (Camerer, Loewenstein, and Weber, 1989(1)). a) One way to interpret these results is as a fundamental strike against the validity of culpability determinations under the negligence standard: even the most well-intentioned jurors will be structurally biased toward overstating the dangerousness of the defendant’s conduct, all else equal. b) Alternatively, and more constructively, economic experiments could be seen as a tool for understanding and remedying judgment biases that undermine the standard. Camerer, Loewenstein, and Weber (1989)(1), for example, find that participation in a market structure helps to partially reduce the curse of knowledge. Whether jury deliberation performs a similar function is an open empirical question. Similarly, a recent economic experiment by Wu et al. (2012)(4) suggests that providing informed Parisi I 94 subjects with specific details about the evaluative process used by an uninformed subject may help to substantially reduce hindsight bias when the informed subject attempts to assess the judgment of the uninformed subject. Hindsight bias: (...) the influence of hindsight bias on fact-finding is not limited to actions in negligence. Mandel (2006)(5) considers hindsight bias in patent applications, for example, but the problem should be expected to arise generically whenever the fact-finder is required to consider the ex ante probability of an ex post known outcome. Baysian updating: (...) hindsight bias is not the only judgment bias implicating probability determinations under the negligence standard (see e.g. Kahneman, Slovic, and Tversky, 1982)(6). Experimental evidence of the difficulty of Bayesian updating (Grether 1992(7); see also Koehler and Kaye, 1991(8)) and possible workarounds (e.g. Gigerenzer and Hoffrage, 1995(9)) are particularly on-point. 1. Camerer, C., G. Loewenstein, and M. Weber (1989). “The curse of knowledge in economic settings: An experimental analysis.” Journal of Political Economy 97(5): 1232–1254. 2. Fischhoff, B. F. (1975). “Hindsight ≠ Foresight: the Effect of Outcome Knowledge on Judgment under Uncertainty.” Journal of Experimental Psychology: Human Perception and Performance 1(3): 288–299. 3. Slovic, P. and B. Fischhoff (1977). “On the Psychology of Experimental Surprises.” Journal of Experimental Psychology: Human Perception and Performance 3(4): 544–551. 4. Wu, D. A., S. Shimojo, S. W. Wang, and C. F. Camerer (2012). “Shared visual attention reduces hindsight bias.” Psychological Science 23(12): 1524–1533. 5. Mandel, G. N. (2006). “Patently Non-Obvious: Empirical Demonstration That the Hindsight Bias Renders Patent Decisions Irrational.” Ohio State Law Journal 67: 1391–1463. 6. Kahneman, D., P. Slovic, and A. Tversky (1982). Judgment under Uncertainty: Heuristics and Biases. Cambridge: Cambridge University Press. 7. Grether, D. M. (1992). “Testing Bayes Rule and the Representativeness Heuristic: Some Experimental Evidence.” Journal of Economic Behavior & Organization 17(1): 31–57. 8. Koehler, J. J. and D. H. Kaye (1991). “Can Jurors Understand Probabilistic Evidence?” Journal of the Royal Statistical Society: Series A 154(1): 75–81. 9. Gigerenzer, G. and U. Hoffrage (1995). “How to Improve Bayesian Reasoning Without Instruction: Frequency Formats.” Psychological Review 102(4): 684–704. Sullivan, Sean P. and Charles A. Holt. „Experimental Economics and the Law“ In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Experimental Economics Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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> Counter arguments against Experimental Economics
> Counter arguments in relation to Experiments
