Week5 - Introduction to Experimentation

• what is behavioural economics the study of

  the study of the cognitive and emotional forces that affect human economic behaviour
• what is the tool of laboratory experiments and what is the tool good for

  creates a fully controlled environment of economic decision making. there is a tradeoff between the level of control and the level of virtualisation. there is the option of manipulating the environment to study specific aspects

  
  

  i. testing theories

  ii. testing general claims about rationality

  iii. testing competing mechanisms or incentive schemes
• what is the methodology of experimental economics

  i. careful design of the environment that allows you to answer a specific question

  ii. using real payoffs as a tool for creating a real economic environment

  iii. use confidentiality among subjects to avoid uncontrolled effects

  iv. avoid deception

  v. be aware to sample size

  vi. honesty
• what is the natural link between behavioural and experimental economics

  experimental economics focuses on the discrepancies between theoretical results and empirical evidence form the lab
• name and explain the other related methods to behavioural economics

  i. field experiments

  ii. neuroeconomics

  iii. BioEcon - effects of substances on economic decisions

  iv. GenoEconomics - attributing genetic differences to different patterns of decision making