Abstract
The present article builds on a background paper that was commissioned for a “witness seminar” in 2010 that had a dozen prominent experimental economists—witnesses, indeed—discuss the origin and evolution of experimental economics. Rather than providing a history of the experimental method in the behavioral science (with particular emphasis on those practices that informed experimental practices in economics), I was asked to provide exhibits from the early years of experimental economics. I was asked to refrain from interpretation and evaluation: “any suggestion of a linear history (as for example when, how and why the experimental methods in economics departed from those in psychology) should be avoided. … it is absolutely crucial to the success of the Witness Seminar to have the paper written open-ended, highlighting the questions at the time about specific episodes in experimenting. …” (email from Harro Maas and Andrej Svorenčík12/12/2009).
I dedicate this manuscript to Raymond C. Battalio who surely would have been among the eminent invitees to the witness seminar had he not passed away, at age 66, Dec. 1, 2004. He was an audacious pioneer of experimental economics. He was also a wonderful teacher and mentor. I am grateful for all he taught me.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Interestingly, Lenfant documents that three reviews of Thurstone’s article that preceded the Wallis–Friedman chapter gained little traction.
- 2.
In his article, Thurstone presented only the data of one of his subjects stressing that “the same procedures have been tried on several other subjects with similar results” (Thurstone, L. L. 1931. The Indifference Function. Journal of Social Psychology, 2, 139–67).
- 3.
Later authors, namely, Rousseas, S. W. and Hart, A. G. 1951. Experimental Verification of a Composite Indifference Map. The Journal of Political Economy, 59, 288–318, Maccrimmon, K. R. & Toda, M. 1969. The Experimental Determination of Indifference Curves. The Review of Economic Studies, 36, 433–451, Moscati, I. 2007. Early Experiments in Consumer Demand Theory (1930–1970. History of Political Economy, 39, 359–402) begged to differ. Moscati documents that the Rousseas and Hart article, save a couple of citations, had little traction (ibid.). The MacCrimmon and Toda article did better, as it managed to attract in the following two decades about a dozen citations in the journals of economics, business, and finance listed in JSTOR.
The extended discussion of methodological issues that might mar an experiment’s validity, Maccrimmon, K. R. and Toda, M. 1969. The Experimental Determination of Indifference Curves (The Review of Economic Studies, 36, 433–451) is a very explicit response to various criticisms leveled against precursor experiments in this area. Indeed, these pages demonstrate convincingly the seriousness with which methodological issues were being discussed at the tail end of the 1960s. This statement is also true for Jim Friedman’s paper which was published in The Review of Economic Studies, as part of a symposium on experimental economics (Friedman, J. W. 1969 . On Experimental Research in Oligopoly. Review of Economic Studies 36, 399–415).
- 4.
Castro and Weingarten set out to explain “the manner in which experimental techniques may be systematically applied to the analysis of basic economic behavior” (Castro, B. & Weingarten, K. 1970. Toward Experimental Economics. Journal of Political Economy, 78, 598–607). Both Kagel and Naylor reacted explicitly to the Castro and Weingarten article, the former pointing out the “advantages and potentialities of designed experimentation in token economies” (Kagel, J. H. 1972. Token Economies and Experimental Economics. Journal of Political Economy, 80, 779–785), by way of several examples, while the latter argued “[the] paper by Castro and Weingarten is both misleading and incomplete. First, the literature in economics abounds with articles on experimental economics. Second, the authors’ survey of the literature in experimental economics omits some of the most important contributions in this field. Third, the authors completely ignore an important new field of experimental economics – namely, computer simulation experiments with models of economic systems. My paper contains an extensive survey of the literature on real-world experiments in economics as well as computer simulation experiments” (Naylor, T. H. Ibid. Experimental Economics Revisited. 347–352). Among the articles Naylor discussed were a complete list of those motivated by Thurstone (1931) including MacCrimmon and Toda (1969), multiple references to Siegel’s work, more than a dozen articles on market experiments (missing, though, the work of the “Frankfurt school”; see Sadrieh, A., Abbink, K. & Tietz, R. 2008. Experimental economics in Germany, Austria, and Switzerland: a collection of papers in honor of Reinhard Tietz, Marburg, Metropolis-Verl.), half a dozen articles dealing with large-scale social experiments, and a long section on computer simulation experiments.
- 5.
He “carried out extensive and costly experiments on his large estate, kept precise records, designed new methods for experimentation, all this lasting many years” (Morgenstern, O. 1954. Experiment and Large-Scale Computation in Economics. In: Morgenstern, O. (ed.) Economic Activity Analysis. New York: John Wiley).
- 6.
“Good examples are offered by a company planning the sale of new product and testing in similar, but separate towns, different advertising campaigns using various packages, prices, timing, etc. … These experiments, so far as I can see, are totally neglected in economics where they are, or rather will be, of the greatest significance, even in their present form. … Steps should be taken for a close cooperation with business firms; the benefits would be mutual and of the highest significance” (ibid).
- 7.
Mosteller and Nogee do not cite Wallis and Friedman (1942), but they mentioned prominently and repeatedly (footnotes 1 and 7) that their experimental design benefitted from discussions with Friedman and Savage, as well as Wallis (Mosteller, F. & Nogee, P. 1951. An Experimental Measurement of Utility. The Journal of Political Economy, 59, 371–404). Throughout their article one finds methodological reflections that are clearly responses to the objections that Wallis and Friedman (1942) enumerate.
- 8.
“The production of new microdata sets is extremely costly. … The enormous cost of generating new microdata sets thus means that economists tend to use the best existing sets of data even though they may be seriously deficient for research needs, a tendency that can be offset only if the high costs are balanced by equally high returns” (Juster, F. T. 1970. Microdata, Economic Research, and the Production of Economic Knowledge. The American Economic Review, 60, 138–148).
“Assume that you had a dissertation student writing on the question: ‘Other things equal, are retail prices higher in ghetto areas than suburban areas?’ Further assume that data already available could be used to examine the problem, but that the data were, as usual, seriously deficient … Further assume that an extra two years would be required to collect and analyze the relevant data, and that additional costs would be incurred to raise the required funds. Given these facts, do you recommend that your dissertation student obtain the relevant observations or use existing data? I suggest that your student’s professional reputation and expected income would be unaffected by the choice of research strategy, and hence that you could not in fairness recommend the investment of an extra couple of years in generating observations. Yet the social value of the two research designs is markedly different: one has the potential for providing a solid basis for policy decisions; the other does not” (ibid).
- 9.
Rutherford and Lemov have provided us with highly readable accounts of the history of the many players and experiments in this space. Rutherford attempts to sketch out the huge influence that behaviorism had and, notwithstanding the naysayers, allegedly still has both within the academy and outside of it. In many respects, Rutherford’s book complements Lemov’s masterful study of the motivations (attempts at engineering human and social behavior on an ambitious scale) and drivers (general funding through various covert (e.g., the Human Ecology and related satellite projects) and not-so-covert state agencies (e.g., the CIA)). In Lemov’s book Skinner takes second place to influential (at their time) researchers such as Jacques Loeb, John B. Watson, Beardsley Ruml, Clark Hull, O. Hobart Mowrer, Neal Miller, John Dollard, George Peter Murdock, Louis Jolyon (“Jolly”) West, Harold George Wolff, and Ewen Cameron. Both authors overlook the influence that their protagonists had on experimental economics, or at least that part of experimental economics that was attracted by token economies and animal experiments. Lemov, R. M. 2005. World as laboratory: experiments with mice, mazes, and men, New York, Hill and Wang, Rutherford, A. 2009. Beyond the box B.F. Skinner's technology of behavior from laboratory to life, 1950s–1970s.
- 10.
Interestingly, psychologist Ward Edwards was the discussant of the May and Papandreou papers at the Chicago 1952 meeting of the Econometric Society. Edwards had just completed his Ph.D. at Harvard under John G. Beebe Center and Mosteller, his dissertation being “an experimental study on risky choices that built on the Mosteller-Nogee experiment” (Moscati, I. 2007. Early Experiments in Consumer Demand Theory: 1930–1970. History of political economy., 39, 359–402). Let us add that Ward Edwards, by his own recognizance (Edwards, W. 1981. This week’s citation classic (W Edwards, 1954). Citation Classics, 6, 312.), as a graduate student read an article by psychologist Kurt Lewin and coauthors about aspiration levels and in the same week attended a seminar where Mosteller talked about his work:
“The obvious similarity of the ideas from such dissimilar roots stimulated me, and interacted with knowledge of economic theory obtained because my father was a prominent economist and because I had taken many economics courses as undergraduate. This confluence of ideas (which in fact, as I learned much later, converged earlier in Berlin in 1928) led to my PhD thesis and to my lifelong research interest in decision making. At Johns Hopkins, in my first post-PhD job, I decided that I could not afford my existing state of ignorance about the literature of decision making, then mostly a topic in economics and statistics. Since I had to write the stuff anyhow, I chose to get a publication out if it by writing a review. So I borrowed for 3 months an office in the library of the economics department, holed up all day, every day, and emerged with ‘The theory of decision making’ in virtually final-draft form. … The topic of decision making apparently was not salient in psychological thinking as available for research and theorizing; this article made it so. … Economists, too, found it useful; they had not considered the possibility that the assertions about individual behavior and rationality that make up the content of microeconomics were readily subject to experimental test, and that some such tests had been performed, with dubious results” (ibid). Edwards, W. 1954. The theory of decision making (Psychological Bulletin 51, 380–417) became indeed a citation classic.
- 11.
… and does so touchingly, yet unsentimentally …
References
1955. Consumer survey statistics; report [submitted to] the Subcommittee on Economic Statistics of the Joint Committee on the Economic Report. Washington: Board of Governors of the Federal Reserve System. (Smythies Report)
Battalio, R. C., Fisher, E. B., Kagel, J. H., Basmann, R. L., Winkler, R. C. & Krasner, L. 1974. An Experimental Investigation of Consumer Behavior in a Controlled Environment. Journal of Consumer Research, 1.
Battalio, R. C., Green, L. & Kagel, J. H. 1981a. Income-Leisure Tradeoffs of Animal Workers. The American Economic Review, 71, 621–632.
Battalio, R. C., Kagel, J. H. & Kogut, C. A. 1991. Experimental Confirmation of the Existence of a Giffen Good. The American Economic Review, 81, 961–970.
Battalio, R. C., Kagel, J. H., Rachlin, H. & Green, L. 1981b. Commodity-Choice Behavior with Pigeons as Subjects. Journal of Political Economy, 89, 67–91.
Battalio, R. C., Kagel, J. H., Winkler, R. C., Fisher, E. B., Basmann, R. L. & Krasner, L. 1973. A Test of Consumer Demand Theory Using Observations of Individual Consumer Purchases. Economic Inquiry, 11, 411–428.
Brady, B. S. 1965. Book review of Juster (1964). Journal of Marketing Research, 2, 202–4.
Brunk, M. E. & Federer, W. T. 1953. Experimental Designs and Probability Sampling in Marketing Research. Journal of the American Statistical Association, 48, 440–452.
Castro, B. & Weingarten, K. 1970. Toward Experimental Economics. Journal of Political Economy, 78, 598–607.
Chamberlin, E. H. 1948. An Experimental Imperfect Market. Journal of Political Economy, 56, 95–108.
Davidson, D., Suppes, P. & Siegel, S. 1957. Decision Making: An Experimental Approach, Stanford, Stanford University Press.
Edwards, W. 1954. The theory of decision making. Psychological Bulletin 51, 380–417.
Edwards, W. 1981. This week’s citation classic (W. Edwards 1954). Citation Classics, 6, 312.
Engvall Siegel, A. 1964. Sidney Siegel: a memoir. In: Messick, S. & Brayfield, A. H. (eds.) Decision and Choice. Contributions of Sidney Siegel. New York McGraw-Hill Book Co.
Friedman, J. W. 1969. On Experimental Research in Oligopoly. Review of Economic Studies 36, 399–415.
Hertwig, R. & Ortmann, A. 2001. Experimental practices in economics: a methodological challenge for psychologists? The Behavioral and Brain Sciences, 24, 383–403.
Heukelom, F. 2010. Measurement and decision making at the University of Michigan in the 1950s and 1960s. Journal of the History of the Behavioral Sciences, 46, 189–207.
Innocenti, A. & Zappia, C. 2005. Thought- and performed experiments in Hayek and Morgenstern. In: Fontaine, P. & Leonard, R. (eds.) The Experiment in the History of Economics. London: Routledge.
Juster, F. T. 1960. Prediction and Consumer Buying Intentions. The American Economic Review, 50, 604–617.
Juster, F. T. 1961. Book Review: The Powerful Consumer. Journal of Political Economy, 69, 503–504.
Juster, F. T. 1964. Anticipations and purchases: an analysis of consumer behavior, Princeton, N.J., Princeton University Press.
Juster, F. T. 1966. Consumer Buying Intentions and Purchase Probability: An Experiment in Survey Design. Journal of the American Statistical Association, 61, 658–696.
Juster, F. T. 1970. Microdata, Economic Research, and the Production of Economic Knowledge. The American Economic Review, 60, 138–148.
Juster, F. T. 1974. The Use of Surveys for Policy Research. The American Economic Review, 64, 355–364.
Juster, F. T. 1984. Basic Research in the Social and Behavioral Sciences. Science, 226, 610–610.
Juster, F. T. & Stafford, F. P. 1991. The allocation of time : empirical findings, Behavioral models, and problems of measurement. Journal of Economic Literature (Stanford), 29, 471–522.
Kagel, J. H. 1972. Token Economies and Experimental Economics. Journal of Political Economy, 80, 779–785.
Kagel, J. H. 1987. Economics according to the rats (and pigeons too): What have we learned and what can we hope to learn? In: Roth, A. E. (ed.) Laboratory experimentation in economics: six points of view. Cambridge; New York: Cambridge University Press.
Kagel, J. H. & Battalio, R. C. 1980. Token Economy and Animal Models for the Experimental Analysis of Economic Behavior. In: Kmenta, J. & Ramsey, J. B. (eds.) Evaluation of econometric models. New York: Academic Press.
Kagel, J. H. & Roth, A. E. 1995. The handbook of experimental economics, Princeton, N.J., Princeton University Press.
Kagel, J. H. & Winkler, R. C. 1972. Behavioral Economics: Areas of Cooperative Research Between Economics and Applied Behavioral Analysis. Journal of Applied Behavior Analysis, 5, 335–342.
Kalisch, G. K., Millnor, J. W., Nash, J. F. & Nering, E. D. 1954. Some Experimental n-Person Games. In: Thrall, R. M., Coombs, C. H. & Davis, R. L. (eds.) Decision Processes. New York: Wiley.
Kazdin, A. E. 1978. History of behavior modification: experimental foundations of contemporary research, Baltimore, University Park Press.
Kazdin, A. E. 1982. The Token Economy: A Decade Later. Journal of Applied Behavior Analysis, 15, 431–445.
Lemov, R. M. 2005. World as laboratory : experiments with mice, mazes, and men, New York, Hill and Wang.
Lenfant, J.-S. 2009. Experimental Indifference Curves and the Ordinalist Revolution [Online]. Available: http://hes-conference2009.com/papers/MON2D-Lenfant.pdf [Accessed April 30, 2010.
Loomes, G. 1988. Book Review: Laboratory Experimentation in Economics: Six Points of View. The Economic Journal, 98, 1206–1208.
MacCrimmon, K. R. & Toda, M. 1969. The Experimental Determination of Indifference Curves. The Review of Economic Studies, 36, 433–451.
May, K. O. 1953. The Intransitivity of Individual Preferences. Econometrica, 21, 476.
May, K. O. 1954. Intransitivity, Utility, and the Aggregation of Preference Patterns. Econometrica, 22, 1–13.
McDonough, T. 2003. Of Rats and Economists. Journal of the History of Economic Thought, 25, 397–411.
Messick, S. & Brayfield, A. H. (eds.) 1964. Decision and choice; contributions of Sidney Siegel, New York: McGraw-Hill.
Morgenstern, O. 1950. On the accuracy of economic observations, Princeton/N.J., Princeton University Press.
Morgenstern, O. 1954. Experiment and Large Scale Computation in Economics. In: Morgenstern, O. (ed.) Economic Activity Analysis. New York: John Wiley.
Moscati, I. 2007. Early Experiments in Consumer Demand Theory: 1930–1970. History of Political Economy, 39, 359–402.
Mosteller, F. & Nogee, P. 1951. An Experimental Measurement of Utility. The Journal of Political Economy, 59, 371–404.
Namias, J. 1965. What Are the Odds? Journal of Marketing, 29, 108–109.
Naylor, T. H. 1972. Experimental Economics Revisited. Journal of Political Economy, 80, 347–352.
Neumann, J. V. & Morgenstern, O. 1944. Theory of games and economic behavior, Princeton.
Ortmann, A. 2005. Field experiments in economics: some methodological caveats. Research in experimental economics: a research annual, 10, 51–70.
Papandreou, A. G. 1953. An Experimental Test of an Axiom in the Theory of Choice. Econometrica, 21, 477.
Papandreou, A. G., Hurwicz, L., Sauerlender, O. H., Franklin, W. & Brownlee, O. H. 1955. A Test of a Proposition in the Theory of Choice. Econometrica, 23, 333.
Radford, R. A. 1945. The Economic Organization of P.O.W. Camps. Economica, 12, 189–201.
Rose, A. M. 1957. A Study of Irrational Judgments. Journal of Political Economy, 65, 394–402.
Rosenthal, R. 1994. Interpersonal Expectancy Effects: A 30-Year Perspective. Current Directions in Psychological Science, 3, 176–179.
Rosenthal, R. & Rubin, D. B. 1978. Interpersonal expectancy effects: the first 345 studies. Behavioral and Brain Sciences, 1.
Roth, A. E. 1995. Introduction to Experimental Economics. In: Kagel, J. H. & Roth, A. E. (eds.) Handbook of Experimental Economics. Princeton University Press.
Rousseas, S. W. & Hart, A. G. 1951. Experimental Verification of a Composite Indifference Map. The Journal of Political Economy, 59, 288–318.
Rutherford, A. 2009. Beyond the box B.F. Skinner's technology of behavior from laboratory to life, 1950s-1970s.
Sadrieh, A., Abbink, K. & Tietz, R. 2008. Experimental economics in Germany, Austria, and Switzerland: a collection of papers in honor of Reinhard Tietz, Marburg, Metropolis-Verl.
Schram, A. 2005. Artificiality: The tension between internal and external validity in economic experiments. Journal of Economic Methodology, 12, 225–237.
Schultz, H. 1933. Frisch on the Measurement of Utility. Journal of Political Economy, 41, 95–116.
Schultz, H. 1938. The theory and measurement of demand, Chicago, Ill., The University of Chicago Press.
Siegel, S. 1957. Level of aspiration and decision making. Psychological review, 64, 253–62.
Siegel, S. 1961. Decision Making and Learning Under Varying Conditions of Reinforcement. Annals of the New York Academy of Sciences, 89, 766–783.
Siegel, S. & Andrews, J. M. 1962. Magnitude of reinforcement and choice behavior in children. Journal of Experimental Psychology, 63, 337–341.
Siegel, S. & Goldstein, D. A. 1959. Decision-making behavior in a two-choice uncertain outcome situation. Journal of Experimental Psychology, 57, 37–42.
Simon, H. A. 1947. Administrative behavior : a study of decision-making process in administrative organization, New York, The Macmillan Company.
Simon, H. A. 1957. Models of man: social and rational; mathematical essays on rational human behavior in society setting, New York, Wiley.
Simon, H. A. 1959. Theories of Decision Making in Economics and Behavioral Science. American Economic Review, 49, 253.
Smith, V. L. 1976. Experimental Economics: Induced Value Theory. The American Economic Review. Papers and Proceedings of the Eighty-eighth Annual Meeting of the American Economic Association 66, 274–279.
Smith, V. L. 1982. Microeconomic Systems as an Experimental Science. The American Economic Review, 72, 923–955.
Smith, V. L. 2008. Discovery - A Memoir, Bloomington, IN, AuthorHouse.
Thrall, R. M., Coombs, C. H. & Davis, R. L. 1954. Decision processes, New York; London, Wiley; Chapman and Hall.
Thurstone, L. L. 1931. The Indifference Function. Journal of Social Psychology, 2, 139–67.
Wallis, W. A. & Friedman, M. 1942. The Empirical Derivation of Indifference Functions. In: Lange, O., McIntyre, F. & Yntema, T. (eds.) Studies in Mathematical Economics and Econometrics in Memory of Henry Schultz. Chicago: University of Chicago Press.
Zizzo, D. J. 2010. Experimenter demand effects in economic experiments. Experimental Economics, 13, 75–98.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2016 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Ortmann, A. (2016). Episodes from the Early History of Experimentation in Economics. In: Svorenčík, A., Maas, H. (eds) The Making of Experimental Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-20952-4_9
Download citation
DOI: https://doi.org/10.1007/978-3-319-20952-4_9
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-20951-7
Online ISBN: 978-3-319-20952-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)