Experimental and Behavioral Economics Experimental Design Sebastian Strasser

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Experimental and Behavioral Economics

Experimental Design

Sebastian Strasser

University of Munich

June 1, 2011

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Purpose of Experiments

Main Objective: Causal inferences from observed behavior

I Random assignment of subjects (remember the urn!)

I Maximum of control over (unobserved) independent variables

Methodological cornerstones

I Salience and incentivized actions

I Replicability of findings

I No deception of subjects

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The most important design questions - I

I One-Shot vs. Repetition

I Issues: Different set of theoretical equilibria, learning, boredom, stability of results, etc.

I Matching Protocol

I Partner Matching

I Identifiability vs. Non-Identifiability

I Stranger Matching

I Perfect Stranger Matching

I Within-subject design vs. Between-subject design

I Issues: Learning, heterogeneity, obviousness of research question

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The most important design questions - II

I The role of information (who knows what at which point in time)

I Presentation of Instructions, framing, wording

I Order effects

I Control for (un-)observables (risk, social preferences, time, experience, beliefs, knowledge, socio-demographics, etc.)

I Confounds (experimenter demand effect, anonymity, etc.)

I Calibration of earnings

I Factorial designs (n ×m)

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Some more specialized design issues

I Strategy vector method vs. direct choices

I Communication

I Group decisions (voting, etc.)

I Implementation of (potential) losses

I Control questions, quizzes, trial periods

I Real effort tasks

I Questionnaires

I Classroom experiments

I Pen-and-Paper vs. computerized (see zTree later)

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The concept of independent observations

Essential to the statistical analysis

I Set of persons that inno wayinteracts with a different set of persons before or during the experiment in terms of ...

I ... actions

I ... information

I ... beliefs