Economics serving society

Program content

PNG - 457 kb

The program offers an overview of experimental methods and techniques aimed at understanding economic behavior: how to design, implement and analyze an experiment so to answer a research question. The programme 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 and identification challenges. Participants will be trained with the goal of being able to soundly rely on experiments in their future research projects, and to better evaluate existing experimental research.

Structure
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.

Workshop sessions
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 (based on short presentations) with a set of 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.


Experimental Methodology: objectives, methods and uses of experiments in economics - Nicolas Jacquemet

Objectives
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.

Course structure

  • Why? The need for experimental methods in economics
  • The emergence of experiments in economics
  • The need for experimental methods in economic theory
  • How? Laboratory experiments in practice
  • The design of experiments – the actual environment
  • The design of experiments – the perceived environment
  • What laboratory experiments tell us

The main reference for the lectures is Jacquemet N., L’Haridon O. (2018).
Experimental Economics: Method and Applications. Cambridge University Press, https://www.cambridge.org/fr/academic/subjects/economics/econometrics-statistics-and-mathematical-economics/experimental-economics-method-and-applications.


Topic 1 : Methods and tricks of the trade - Béatrice Boulu-Reshef

The first session is an “experimental lecture”, which, by putting participants in the shoes of an experimental subject, illustrates classical problems and solutions to the practical implementation of a lab experiment. The purpose is to demonstrate in vivo how experimental protocols can be implemented and to 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 introduced.

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. 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.

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.

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.

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.

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.


Contents - Experimental Economics