The economist as engineer: Game theory, experimentation, and computation as tools for design economics

Roth, Alvin E. “The economist as engineer: Game theory, experimentation, and computation as tools for design economics." Econometrica 70.4 (2002): 1341-1378. [PDF] [**]

==abstract==

Economists have lately been called upon not only to analyze markets, but to design them. Market design involves a responsibility for detail, a need to deal with all of a market’s complications, not just its principle features. Designers therefore cannot work only with the simple conceptual models used for theoretical insights into the general working of markets. Instead, market design calls for an engineering approach. Drawing primarily on the design of the entry level labor market for American doctors (the National Resident Matching Program), and of the auctions of radio spectrum conducted by the Federal Communications Commission, this paper makes the case that experimental and computational economics are natural complements to game theory in the work of design. The paper also argues that some of the challenges facing both markets involve dealing with related kinds of complementarities, and that this suggests an agenda for future theoretical research.

KEYWORDS:Market design, game theory, experimental economics, computational economics

Mindful economics: The production, consumption, and value of beliefs

Bénabou, Roland, and Jean Tirole. “Mindful economics: The production, consumption, and value of beliefs." Journal of Economic Perspectives 30.3 (2016): 141-64. [PDF] aeaweb.org

==YNY==

人類的 heuristics and biases (Tversky and Kahneman 1974)

  • over-confidence,
    (as discussed in a “Symposium on Overconfidence” in the Fall 2015 issue of this journal)
    YNY: moderate overconfidence can be helpful to enhance people’s ability to do things and interact with others successfully. Overoptimistic individuals often work more, save more, expect to retire later, and much healthier.
  • confirmation bias,
  • distorted probability weighting

本文回顧 growing literature on motivated beliefs and reasoning

 

==cited by Bruno S. Frey==

[This article] provides a most useful survey of recent insights of psychology but also makes a successful effort to integrate them into economics. They deal with heuristics and biases inconsistent with the standard homo oeconomicus such as over-confidence, confirmation bias, distorted probability weighting, and other cognitive mistakes.

The economics of two-sided markets

Rysman, Marc. “The economics of two-sided markets." Journal of economic perspectives 23.3 (2009): 125-43. [aeaweb];[PDF][**]

==first para.==

At a local Best Buy, a child places a new Sony PlayStation 3 on the cashier’ scounter while the parents dig out their Visa card. The gaming system and the payment card may appear to have little connection other than this purchase. However, these two items share an important characteristic that is generating a series of economic insights and has important implications for strategic decision making and economic policy making. Both video game systems and payment cards are examples of two-sided markets.

如何得知期刊是否收錄於Web of Science資料庫?

引自臺大圖書館:http://tul.blog.ntu.edu.tw/archives/2598

可利用資料庫出版社提供的 Master Journal List 進行查找。茲將查找方式說明如下:【English version please see this article

1. 請連線Master Journal List網頁:http://mjl.clarivate.com/

2. 若欲瀏覽期刊收錄清單,請點選網頁下方的資料庫名稱。

SCIE 全稱為 Science Citation Index Expanded
SSCI 全稱為 Social Sciences Citation Index

以 Agricultural Finance Review 為例, 蒐尋結果如下

 

Theory and experiment: What are the questions?

Smith, Vernon L. “Theory and experiment: What are the questions?." Journal of Economic Behavior & Organization 73.1 (2010): 3-15. [PDF];[my notes]

==YNY==

Smith 提到了 OPM (other person’s money) 問題,可以用以下的方式解決

We could give the constant positive sum ultimatum game economic content as follows: Each player provides $M of his own money. Some procedure is used for pairing the subjects, and determining who is to be Player 1 and who Player 2; this procedure in some variations might incorporate an earned and/or investment feature. It is understood that their pairing has economic significance in the sense that there are synergistic gains from the interaction equal to some fixed sum y > 2M. The experimenter provides only the surplus above 2M which represents the gains from specialization and exchange, as this is the one reliable source of a “free lunch” that converts economic systems into non-zero sum games. Hence, the total to be shared under the property right rules of the game is 2M + y, making it feasible for each to receive a share of the jointly created net gain above their pooled initial contribution, 2M.

2010 JEBO, On the Methodology of Experimental Economics

J. Barkley Rosser, Catherine Eckel,
Introduction to JEBO special issue on “Issues in the Methodology of Experimental Economics”,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 1-2,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.07.017.
(http://www.sciencedirect.com/science/article/pii/S0167268109002790)

William S. Neilson,
Lessons from a behavioral economics success story: Comment on theory and experiment: What are the questions?,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 62-64,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.10.016.
(http://www.sciencedirect.com/science/article/pii/S0167268109002686)

Daniel Houser, Erte Xiao,
Understanding context effects,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 58-61,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.01.006.
(http://www.sciencedirect.com/science/article/pii/S0167268109002674)

Ken Binmore, Avner Shaked,
Experimental economics: Where next?,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 87-100,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.10.019.
(http://www.sciencedirect.com/science/article/pii/S0167268109002820)
Abstract: Where should experimental economics go next? This paper uses the literature on inequity aversion as a case study in suggesting that we could profit from tightening up our act.

Jörg Oechssler,
Searching beyond the lamppost: Let’s focus on economically relevant questions,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 65-67,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.10.017.
(http://www.sciencedirect.com/science/article/pii/S0167268109002698)
Abstract: Experimental economics is in danger of behaving like the famous drunk who searches for his keys under the light even though he lost them in some dark corner. It is argued that we are wasting our time (and endangering the respect that other economists have for experimentalists) by playing too much with some of our favorite toys, like the dictator game, rather than focus on new and economically relevant designs.
Keywords: Economic experiments; Methodology; Dictator game; Bubbles

Glenn W. Harrison,
The behavioral counter-revolution,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 49-57,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.11.007.
(http://www.sciencedirect.com/science/article/pii/S0167268109002662)

Gary Bolton,
Testing models and internalizing context: A comment on “Theory and Experiment: What are the questions?”,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 16-20,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.11.002.
(http://www.sciencedirect.com/science/article/pii/S0167268109002595)

Werner Güth, Hartmut Kliemt,
Comments on Vernon Smith’s—“Theory and experiment: What are the Questions?”,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 44-48,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.10.015.
(http://www.sciencedirect.com/science/article/pii/S0167268109002650)
Abstract: When commenting on Vernon Smith’s inspiring paper, we first argue that game theory in its “reasoning about knowledge” tradition is not truly behavioral and try to categorize different approaches. We then go on by considering specific topics, discussed by Vernon Smith, before concluding with some methodological reflections.
Keywords: Game theory; Behavioral economics; Game and auction experiments; Entitlement; Institutional or mechanism design

Mark Pingle,
Looking under the hood: Exploring assumptions and finding behavioral economics,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 73-76,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.10.018.
(http://www.sciencedirect.com/science/article/pii/S0167268109002716)
Abstract: Cognitive scarcity is a fundamental economic fact, but the standard maximization assumption abstracts from this fact. Much of behavioral economics can be framed as “exploring the maximization assumption.” By applying the tools of behavioral economics to explore this important assumption, we can learn why presuming maximization works, when it works, even when we know the assumption is not accurately descriptive. We can also learn why theory fails when the assumption does not proximately hold.
Keywords: Bounded rationality, Cognitive scarcity, Deliberation cost, Transactions cost, Assumptions

Vernon L. Smith,
What would Adam Smith think?,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 83-86,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.02.020.
(http://www.sciencedirect.com/science/article/pii/S016726810900273X)

David M. Grether,
Comment on Vernon Smith “Theory and experiment: What are the questions?”,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 41-43,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.11.006.
(http://www.sciencedirect.com/science/article/pii/S0167268109002649)

Elinor Ostrom,
Revising theory in light of experimental findings,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 68-72,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.11.008.
(http://www.sciencedirect.com/science/article/pii/S0167268109002704)

Bart J. Wilson,
Social preferences aren’t preferences,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 77-82,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.09.013.
(http://www.sciencedirect.com/science/article/pii/S0167268109002728)
Abstract: Experimental economists robustly observe that people in the laboratory regularly make choices that result in lower payoffs for themselves. When faced with this paradox of preferences, economists posit that there must be two meanings of preferences: preferences for the self and preferences for the social. In this paper I argue that this is an example of economists forcing ordinary human behavior to fit their models. The force of my argument is to confute the notion that an individual’s expression of so-called social preferences as an action can be represented as a set of separable and private utilitarian “preferences” within him.
Keywords: Experimental economics; Semantics of economics; Rhetoric of economics

James C. Cox,
Some issues of methods, theories, and experimental designs,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 24-28,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.01.014.
(http://www.sciencedirect.com/science/article/pii/S0167268109002613)

Ernst Fehr, Klaus M. Schmidt,
On inequity aversion: A reply to Binmore and Shaked,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 101-108,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.12.001.
(http://www.sciencedirect.com/science/article/pii/S0167268109002844)
Abstract: In this paper we reply to Binmore and Shaked’s criticism of the Fehr–Schmidt model of inequity aversion. We put the theory and their arguments into perspective and show that their criticism is not substantiated. Finally, we briefly comment on the main challenges for future research on social preferences.
Keywords: Experiments; Other-regarding preferences; Inequity aversion

Gary Charness,
Laboratory experiments: Challenges and promise: A review of “Theory and Experiment: What are the Questions?” by Vernon Smith,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 21-23,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.11.005.
(http://www.sciencedirect.com/science/article/pii/S0167268109002601)

Ken Binmore, Avner Shaked,
Experimental Economics: Where Next? Rejoinder,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 120-121,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.11.008.
(http://www.sciencedirect.com/science/article/pii/S0167268109002832)

Herbert Gintis,
Towards a renaissance of economic theory,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 34-40,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.09.012.
(http://www.sciencedirect.com/science/article/pii/S0167268109002637)

Rachel Croson, Simon Gächter,
The science of experimental economics,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 122-131,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.09.008.
(http://www.sciencedirect.com/science/article/pii/S0167268109002339)
Abstract: In this paper we present the views of two practicing experimental economists on the role of economic experiments in the science of economics, and in particular on the interaction between economic theory and experimental design and data.
Keywords: Methodology; Experiments; Philosophy of science

Vernon L. Smith,
Theory and experiment: What are the questions?,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 3-15,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.02.008. [PDF]
(http://www.sciencedirect.com/science/article/pii/S016726810900033X)
Abstract: This paper deals generally with testing questions that arise both when experimental observations are in accord with the actions we predict, and when they are not. In both cases the inference of truth from observation is inherently ambiguous, and we face the daunting challenge of using our experimental skills and imagination to reduce this ambiguity. Primarily and most difficult of all we have to constantly reevaluate everything, including ourselves, especially in examining how we talk about and interpret our data. Although I will be drawing on examples and experience from laboratory experiments, the issues I consider apply just as meaningfully to other empirical studies whether from field experiments or observations from past records of socioeconomic processes.
Keywords: Experimental economics; Game theory; Methodology of science

Daniel Friedman,
Preferences, beliefs and equilibrium: What have experiments taught us?,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 29-33,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2008.09.011.
(http://www.sciencedirect.com/science/article/pii/S0167268109002625)

Catherine Eckel, Herbert Gintis,
Blaming the messenger: Notes on the current state of experimental economics,
Journal of Economic Behavior & Organization,
Volume 73, Issue 1,
2010,
Pages 109-119,
ISSN 0167-2681,
https://doi.org/10.1016/j.jebo.2009.03.026.
(http://www.sciencedirect.com/science/article/pii/S0167268109002819)
Abstract: Binmore and Shaked (this issue) criticize Fehr and Schmidt’s (1999) model of inequality aversion. We present a considerable body of experimental research supporting the inequality aversion motive. Binmore and Shaked also urge experimentalists to adopt “a more skeptical attitude when far-reaching claims about human behavior are extrapolated from very slender data.” It is true that experimental findings indicate that the standard neoclassical model fails to predict a considerable range of strategic behaviors widely observed in the laboratory, particularly under conditions where normative behavior is prevalent in every-day social life. This is indeed a “far-reaching claim,” but one amply justified by an impressive and constantly growing body of evidence from experiments.
Keywords: Inequality aversion; Neoclassical theory; Experimental

2010 JEBO Special Issue: Experimental Methods in Entrepreneurship Research

[link to elsevier]

  1. On experiments in entrepreneurship research

    Pages 1-2
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  2. Entrepreneurship and occupational choice: Genetic and environmental influences

    Pages 3-14
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  3. Pages 15-29
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  4. Holding on for too long? An experimental study on inertia in entrepreneurs’ and non-entrepreneurs’ disinvestment choices

    Pages 30-44
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  5. The impact of risk attitudes on entrepreneurial survival

    Pages 45-63
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  6. The good, the bad, and the talented: Entrepreneurial talent and selfish behavior

    Pages 64-81
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  7. Risk attitudes, wealth and sources of entrepreneurial start-up capital

    Pages 82-89
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  8. The effects of entrepreneurship education

    Pages 90-112
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  9. On the evolution of professional consulting

    Pages 113-126
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  10. Enhancing the internal validity of entrepreneurship experiments by assessing treatment effects at multiple levels across multiple trials

    Pages 127-140
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