Title: Three ways of linking laboratory endeavours to the realm of policies
Abstract: Abstract This paper elucidates experimental economists' recent attempts to link their laboratory endeavours to the realm of policies. To be concrete, by concentrating on some of the well-known policy-related works conducted by three thriving research programs in experimental economics, this paper demonstrates what kinds of perspectives contemporary experimental economists take towards a foundational issue in economics, rationality. The disunity this paper finds in experimental economists' practices is interpreted as a source of strength, rather than weakness, for experimental economics as a whole. Keywords: Experimental economicsheuristics and biasesfast and frugal heuristicsprediction marketsecological rationality Acknowledgements An earlier version of this paper was presented at the 2010 Annual Conference of the European Society for the History of Economic Thought (ESHET). I am grateful to two anonymous referees for their insightful comments. I thank Sowon Ahn, Floris Heukelom, Jaehong Hwang, Hai-Sook Kim, Sanghoon Lee, Jonghyun Park, and Andrej Svorencik for their criticisms and suggestions. I am enormously indebted to John Davis, Wade Hands and Hoon Hong for providing me with comments, encouragements and, above all, so many pointers. However, the usual caveats apply. I gratefully acknowledge that the research reported in this paper was supported by the grants from the ESHET and the Jai Won Research Foundation. Notes 1 Libertarian paternalism and asymmetric paternalism (Camerer, Issacharoff et al. 2003) are two of the most well-known policy-related positions in the HB program. Note that libertarian paternalists (Thaler and Sunstein 2008: 249) regard asymmetric paternalism as a form of libertarian paternalism specialising in the cases where the costs incurred to the sophisticated, unbiased decision makers are negligible. 2 Experienced utility refers to the experiences of pain and pleasure; by contrast, decision utility to what utility usually means in modern, standard economic/decision theory, that is, revealed preferences. 3 See Lee (2011) for the details. 4 Over the 1970s and 1980s, economists were paying increasing attention to informational properties of markets – see, for example, Lucas (1972), Plott and Sunder (1982, 1988), Milgrom and Stokey (1982), and Grossman and Stiglitz (1976, 1980). 5 The IEM were at first designed to predict vote shares of the candidates in the 1988 U.S. presidential election (thus called the Iowa Presidential Stock Market). 6 Of course, the IEM do not represent the very 'first' prediction markets in history (Rhode and Strumpf Citation2004). However, there is no doubt that, in recent years, the IEM have played one of the most important roles in popularising prediction markets (see Wolfers and Zitzewitz 2004: 110; Sunstein 2006: 108–11; Abramowicz 2007: 9–15). 7 Some luminaries have recently submitted a plea for abolishing government regulations hampering the development of prediction markets that "have great potential for improving social welfare in many domains" (Arrow et al. Citation2008: 878). 8 John Ledyard (2006: 38–9) provides a lucid discussion of the basic mechanics of prediction markets, which this paper cannot offer due to the space limitation. 9 This characterisation also applies to other experimental market economists (Smith Citation2008: 155). 10 Smith's research on this topic has culminated in his reciprocity-based, "exchange interpretation of two-person interactions [that] provides an important unifying principle across the range of small group and market interactions" (280). 11 See Lee (2011) for the details.
Publication Year: 2011
Publication Date: 2011-10-25
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 26
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