The objective of the Experimental Economics program is to offer young scholars a crash course in empirical methods aimed at understanding economic behavior: how to design, implement and analyze an experiment so to answer a research question. The summer school is methodological in nature, although typical results from behavioral economics will be introduced as examples and illustrations on how protocols are designed to overcome observation/measurement/identification issues. Participants will be trained in the aim of being able to soundly rely on experiments in their future research projects.
The program is divided in three parts:
- a series of general lectures on experimental methodology : objectives, methods and uses of experiments in economics, Nicolas Jacquemet
- a series of specialized classes on specific methodological topics. Methods and tricks of the trade, Béatrice Boulu‐Reshef / Preferences over time and uncertainty, Olivier l’Haridon / Psychometric methods, Fabrice Etilé / Econometrics for experimental data, Angelo Secchi
- workshop sessions where participants present and refine their experimental projects, with feedback from the school’s speakers.
Some sessions are dedicated to the interaction of experienced researchers in the field with the participants of the summer school. The purpose is to have the participants’ projects discussed or deepened by discussions (based on short presentations) with speakers from the lectures. On-going projects (experimental design conception) are welcome and encouraged, rather than already run experiments, to permit a maximal methodological gain. Participants not yet involved in projets are expected to discuss others’ works. The workshop will be moderated by Béatrice Boulu-Reshef, Fabrice Etilé, Nicolas Jacquemet, Fabrice Le Lec, Olivier L’Haridon and Angelo Secchi.
Experimental Methodology: objectives, methods and uses of experiments in economics - Nicolas Jacquemet
The course provides an overview of the use of laboratory experiments as an empirical method to investigate research questions in economics and social sciences. The focus is methodological, and illustrated by examples and applications taken from the literature. The whole spectrum of methodological issues will be covered: Objectives, methods and uses of experiments in economics.
1. Why? The need for experimental methods in economics
a. The emergence of experiments in economics
b. The need for experimental methods in economic theory
2. How? Laboratory experiments in practice
a. The design of experiments – the actual environment
b. The design of experiments – the perceived environment
3. What for? What laboratory experiments tell us
Selected key references
- Harrison, G. W., & List, J. A. (2004). “Field experiments”. Journal of Economic literature, 42(4), 1009-1055.
- Roth, A. E. (1986). “Laboratory experimentation in economics”. Economics and Philosophy, 2(02), 245-273.
- Samuelson, L. (2005). “Economic theory and experimental economics”. Journal of Economic Literature, 43(1), 65-107.
- Smith, V. L. (1982). “Microeconomic systems as an experimental science”. The American Economic Review, 72(5), 923-955.
- Siakantaris, N. (2000). “Experimental economics under the microscope”. Cambridge Journal of Economics, 24(3), 267-281.
- Zizzo, D. J. (2010). “Experimenter demand effects in economic experiments”. Experimental Eco., 13(1), 75-98.
- Schram, A. (2005). “Artificiality: The tension between internal and external validity in economic experiments”. Journal of Economic Methodology, 12(2), 225-237.
- Henrich, J., Heine, S. J., & Norenzayan, A. (2010). “The weirdest people in the world?”. Behavioral and brain sciences, 33(2-3), 61-83.
- Falk, A., & Fehr, E. (2003). “Why labour market experiments?”. Labour Economics, 10(4), 399-406.
- Sunstein, C. R., & Thaler, R. H. (2003). “Libertarian paternalism is not an oxymoron”. The University of Chicago Law Review, 1159-1202.
- Mitchell, G. (2005). “Libertarian paternalism is an oxymoron”. Northwestern University Law Review, 99(3).
- Munnell, A. H. (2003). “A Non-libertarian Paternalist’s Reaction to ‘Libertarian Paternalism is Not an Oxymoron.’”. In Comment delivered at the FRB of Boston’s 48th Annual Conf., Chatham MA, June (pp. 8-10).
- Shogren, J. F. (2006). “A rule of one”. American Journal of Agricultural Economics, 88(5), 1147-1159.
Topic 1 : Methods and tricks of the trade - Béatrice Boulu-Reshef
The first session is an “experimental lecture”, in which by putting participants in the shoe of an experimental subject aims at pointing to classical problems and solutions to the practical implementation of a lab experiment. The purpose is to show them in vivo how experimental protocols can be implemented and illustrate the relevance or shortcomings of some practices and methods. Moreover, being in the shoes of a subject in the lab makes salient what typical mistakes can be avoided when researchers design an experiment and what effects some features can have on observed behavior. Either classic studies that have set standards for the field or counter-examples to good practice will be run.
The second session is dedicated to the writing of instructions, a topic often neglected although of critical importance. The goal of instructions is to make sure that the experimental subjects fully understand the rules of an experiment. If subjects do not understand the rules, control is lost, and the experiment is invalidated and unpublishable. Thus, learning how to write experimental instructions is crucial. This lecture focuses on teaching how to write experimental instructions. We explain what experimental instructions need to achieve, and hence, list the rules that are commonly used by experimental economists. We also review the features of experimental instructions that are debated in the literature. The lecture reviews typical instructions for the main types of experiments. Students will work on writing instructions and will discuss their work in class.
The third session deals with how to extend lab experiment to the field
Selected key references
- Davis, D. and C. A. Holt (1993), “Experimental Economics”, Princeton University Press.
- D. Friedman and S. Sunder (1994), “Experimental Methods: A Primer for Economists”, Cambridge University Press.
- Guala F. (2005), “The Methodology of Experimental Economics”. New York: Cambridge University Press.
Topic 2 : Preferences over time and uncertainty - Olivier L’Haridon
Preferences over time and uncertainty are critical drivers of economic behavior in many contexts. Several experimental methods have been developed to measure them. These methods serve to elicit preferences over time and over uncertainty, both as control variables in more general experiments, but also to test decision-theoretic models. These methods are presented in this lecture with a specific focus on their relative merits. A special emphasis will be put on robust methods to elicit cumulative prospect theory parameters for decision under risk.
Selected key references
- Abdellaoui, M. (2000). “Parameter-free elicitation of utility and probability weighting functions”. Management Science, 46(11), 1497-1512.
- Abdellaoui, M., Bleichrodt, H., l’Haridon, O., & Paraschiv, C. (2013). « Is there one unifying concept of utility? An experimental comparison of utility under risk and utility over time”. Management Science, 59(9), 2153-2169.
- Wakker, P., & Deneffe, D. (1996). “Eliciting von Neumann-Morgenstern utilities when probabilities are distorted or unknown”. Management science, 42(8), 1131-1150.
- Wakker, P. P. (2010). “Prospect theory: For risk and ambiguity”. Cambridge university press.
Topic 3 : Psychometric methods - Fabrice Etilé
This class will introduce the main principles of psychometrics, show how psychometrics can be used in empirical economics, and discuss identification problems and epistemological issues. The course will be based on three sets of papers: (1) articles that develop and validate psychometric scales (with a specific focus on the BIS/BAS scale that measures dispositional sensitivity to rewards and punishments; (2) works that use psychometric scales (especially the BIS/BAS) for interpreting the individual heterogeneity of behaviours in standard experimental games: (3) studies investigating some methodological aspects and limits of psychometrics scales.
Selected key references
- Kline,P.(2014).“The new psychometrics: Science, psychology and measurement”. NewYork: Routledge.
- Carver,C.S., White,T.L.(1994). Behavioral inhibition, behavioral activation, and affective responses to impending reward and punishment: the BIS/BAS scales. Journal of personality and social psychology, 67(2), 319.
- Skatova,A.,Ferguson,E.(2011).What makes people cooperate? Individual differences in BAS/BIS predict strategic reciprocation in a public goods game. Personality and Individual Differences, 51(3), 237‐241.
- Borghans, L., Golsteyn, B.H., Heckman,J., Humphries,J.E.(2011),“Identification problems in personality psychology.”,Personality and individual differences, 51(3), 315‐320.
Topic 4: Econometrics for experimental data - Angelo Secchi
This module provides an overview on econometrics for experimental data with a strong emphasis on non-parametric techniques. Estimating probability densities, distribution free tests et nonparametric regressions will be discussed together with examples and practical suggestions on how to implement them.
Selected key references
Silverman, B.W., (1986). “Density Estimation for Statistics and Data Analysis”, Chapman & Hall.
Racine, J.S. (2008), “Nonparametric Econometrics: A Primer, Foundations and Trends” in Econometrics: Vol. 3: No 1, pp 1-88.
Hollander, M., Dougla A. Wolfe and E. Chicken (2014), “Nonparametric Statistical Methods”, third edition, Wiley.