A blog about economics, politics and the random interests of forty-something professors
August 1, 2011 in Uncategorized | Tags: game theory
I read the transcript and it is a very eloquent clarification of his views on game theory’s role and even the game theorist’s role. Worth checking out.
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August 1, 2011 at 10:01 am
Very interesting talk. I would summarize part of it by the slogan: solutions can be either calculations or recommendations, but not both.
August 1, 2011 at 2:05 pm
Experimental economists reject research in which the subjects are not paid. Is that a barrier to entry they’ve erected, or part of the ethical guidelines of universities and the NSF? (I’m asking because I do not know.)
August 1, 2011 at 2:21 pm
Frank, it is simply to ensure that the subjects have an incentive to perform. Without financial incentives people often generate their own goals (i.e. I want to beat that guy over there, or I want to make sure he doesn’t win etc.) If you run the same experiment with and without payments, you will get different results, and economists figure that the results with payments are more reliable.
A good example is to compare share market games (where players invest pretend money in shares, and the player with the most money at the end of a given time period is the winner) with the actual share market. In the share market game, when there is a large number of players, the strategy that maximises your chance of winning is to dump all of your money in the most volatile stock you can find. In the real share market, this strategy would bankrupt you very quickly.
August 5, 2011 at 5:34 am
Evidence that using incentives makes a big difference is weak and variable. Incentives should be an independent variable and not a constraint. It is useful to know when they matter and why. I think the main reason is that experimental economists want to differentiate themselves from other disciplines, mainly psychology, and these methodological demands are one way of doing so. Of course it also acts as a barrier to entry. All disciplines do this and EE is no exception.
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