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The Study of Behavior

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Methods in Experimental Economics

Part of the book series: Springer Texts in Business and Economics ((STBE))

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Abstract

In this first part of the book we are, in a sense, preparing the stage for what comes later. Experiments have only been part of the economic tools of the trade for a relatively short time and it is important to understand how this instrument fits into the economic toolbox. The explanations on the history of the subject are helpful, but can be skipped by readers who are only interested in the methodological aspects.

The excursions into the history of the subject, in Chaps. 2 and 3, serve to explain how behavioral economics could emerge despite the long dominance of normative theory and why both should be understood as complementary parts. Chapter 5 deals with the external validity of experiments. This refers to the question of whether experimental findings can be transferred to the real world or not.

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Notes

  1. 1.

    We thank Nora Szech, who told us this story.

  2. 2.

    See DellaVigna (2009) for a survey.

  3. 3.

    At the end of the book is an appendix in which, among other things, the most important concepts of game theory are briefly explained.

  4. 4.

    Also see the anthology published on the occasion of the 30th anniversary of the German Society for Experimental Economics (Sadrieh and Weimann 2008) with which Reinhard Tietz, another German pioneer of experimental research, was honored.

  5. 5.

    The choice of the optimal sample size will be discussed in 7 Sect. 4.5.2.

  6. 6.

    He shared it with Vernon Smith. Amos Tversky would probably have been awarded the Nobel Prize as well had he not passed away in 1996.

  7. 7.

    See the very interesting essay by Bruni and Sugden (2007), which strongly inspired our explanations in this section.

  8. 8.

    Fechner is regarded as the founder of modern psychology. 1860 saw the publication, in two volumes, of his main work “Elements of Psychophysics”, containing the description of methods which made it possible to make quantitative statements on feelings and sensations and which were based on the earlier work of Weber (Fechner 1860).

  9. 9.

    The two last paragraphs have been adapted from the manuscript of the book “Measuring Happiness. The Economics of Well-Being” by Andreas Knabe, Ronnie Schöb and Joachim Weimann (Weimann et al. 2015).

  10. 10.

    We will go into this in more detail in 7 Sect. 2.2.

  11. 11.

    This point will also be covered in more detail in 7 Sect. 2.3.

  12. 12.

    The literature on social preferences is in the meantime very extensive. The term social preferences basically means that people not only consider their own well-being, but also that of others when making decisions.

  13. 13.

    See Camerer (2003), Fehr and Schmidt (2006) and Cooper and Kagel (2015) for a survey.

  14. 14.

    Parts of this section have been taken from Weimann (2015).

  15. 15.

    The issue of the context dependency of experimental findings has recently been intensely discussed. We will return to this discussion several times. See, for example, Smith (2010).

  16. 16.

    Francesco Guala’s book “The Methodology of Experimental Economics” (Guala 2005) intensively explores induction as a scientific method, putting experimental economics in a greater methodological context in the process. We will not be dealing with the theoretical aspects of science in any greater depth and therefore refer the interested reader to Guala’s book.

  17. 17.

    Everyone is rational, everyone knows that everyone is rational, everyone knows that everyone knows that everyone is rational, etc.

  18. 18.

    See Weimann (2015) or the discussion in the fourth chapter of the “Handbook of Experimental Methodology” (Fréchette and Schotter 2015).

  19. 19.

    See 7 Sect. 2.2 and Lichters et al. (2016), where the importance of real incentives for experiments in market research is discussed.

  20. 20.

    A summary of the current state of the art can be found in Glimcher et al. (2013).

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Authors and Affiliations

  1. Otto-von-Guericke University Magdeburg, Magdeburg, Germany

    Joachim Weimann

  2. University of Duisburg-Essen, Essen, Germany

    Jeannette Brosig-Koch

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  1. Joachim Weimann
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  2. Jeannette Brosig-Koch
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Correspondence to Joachim Weimann .

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Weimann, J., Brosig-Koch, J. (2019). The Study of Behavior. In: Methods in Experimental Economics. Springer Texts in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-93363-4_1

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