Book Review: A Research Agenda for Experimental Economics edited by Ananish Chaudhuri

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In A research program for experimental economics, Anish Chaudhuri brings together researchers in behavioral economics to explore the contribution of decision-making experiments to social science research. This extensive collection will be useful to both newcomers and experts in the field, writes Egor Bronnikov.

A research program for experimental economics. Ananish Chaudhuri (ed.). Edward Elgar. 2021.

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Previously, there was a clear difference between behavioral and experimental economics. Historically, the former attempts to insert psychological insights into neoclassical models, while the latter tries to adjust natural science methods to test human economic behavior in reduced contexts. Nowadays, however, these terms are often used synonymously and are almost interchangeable. Despite some lingering problems, behavioral and experimental economics has made many advances in understanding phenomena in ways that were not possible within the framework of standard economics. Examples range from everyday life (such as overconfidence in the use of gym memberships or charitable giving behavior) to sophisticated advice relevant to national policy (for example, on discrimination in the marketplace work or employee savings).

To share recent advances in this field, Ananish Chaudhuri, professor of experimental economics at the University of Auckland, curates a new collection of wide-ranging topics brought together by a common theme: behavioral economics. Having already published two highly acclaimed books (Experiences in economics and Behavioral economics and experiments), Chaudhuri’s new collection aims to showcase the cutting-edge achievements of the field, as presented by academic experts.

Test tubes in five glass bottles filled with multicolored liquids

Image by Andreas N from Pixabay

The book consists of two parts: the first five chapters provide readers with several topics covered by economics, broadly defined; the next four chapters present a mosaic of topics adjacent to “pure” areas of economic research.

The first part of the book covers topics such as social norms, stability of preferences, nudging in the context of environmental regulations, entrepreneurial success, and health care. If the first two chapters can be a little demanding for non-economists (the first requires very basic knowledge of economic modeling and the second is built on the understanding of the Coase theorem), the other four are accessible to a reader without training. in economy. Are there stable relationships between being a successful entrepreneur and risk and competition preferences? Can a natural disaster change risk perception, trust and altruism? What is the mechanism that leads humans to fail in resolving disputes and drags them into expensive lawsuits? Which environmental regulation policy is the most effective? Readers curious about the answers to these questions should pay attention to this part of the book.

The second section of the book presents a broader perspective on how the methodology of experimental economics can be applied in disciplines ranging from gender studies to neuroscience, from political psychology to medicine. Perhaps the most unconventional direction this part of the book takes is the one presented in Chapter Ten. Written by David L. Dickinson, professor of economics at Appalachian State University, this chapter provides an overview of the effects of sleep deprivation on social and economic preferences.

Humans exposed to total sleep deprivation the night before the experiment sessions performed significantly differently from well-rested subjects. Subjects in total sleep deprivation exhibited both less risk aversion in the risky gain domain and less risk-loving in the loss domain. Those who were sleep deprived showed a tendency for more antisocial punishments (punishments directed at those who contributed more than the punishing subjects), decreased trust and reliability, and higher levels of poor coordination. This chapter draws a natural but impressively detailed conclusion: lack of sleep is detrimental not only to an individual’s health but also to society in general.

Obviously, there is always a trade-off between completeness, length of a book, and accessibility in terms of the details provided and the time required to read the volume. Written by scholars working in the respective field, each chapter has the same structure: a general introduction to the particular subject, usually with the motivation to demonstrate its practical importance, and a selective rather than exhaustive literature review.

While the first trade-off – choosing several specific areas within experimental economics – is understandable, the other – preferring eclectic and subjective literature reviews to systematic reviews – is more questionable. Of course, one can argue that A Experimental Economics Research Program is not intended to be a manual, which means choosing articles for brevity and readability. However, the book’s approach may still create ambiguity about the reasons for selecting particular articles and may result in a non-conclusion. It is unclear whether this is the effect of the literature itself or the choice of studies made by the authors of the chapters.

A definite advantage of A research program for experimental economics is its focus on the most recent developments in specific areas within behavioral economics. Contributing authors demonstrate both a high level of professional expertise and a genuine passion for the topics presented. Another strength of the book is its attempt not only to discuss the current state of research in particular areas, but also to provide readers with future directions. Each chapter develops possible (and sometimes even desirable) avenues within the framework of the subject addressed. Overall, this book is a strong illustration of the reach and absorption of economics and the importance of multidisciplinarity. Also, there is no path dependency in the collection, so if a reader is interested in a particular topic, they can easily dive straight into it.

A research program for experimental economics falls between a textbook or textbook and an introduction (in the vein of, for example, Behavioral economics by Michelle Baddeley). Chaudhuri provides a brief introduction to the principles of contemporary behavioral and experimental economics (discussing the difference between economic and psychological experiments, payment protocols, and the validity of external and internal experiments). Yet the book still requires some knowledge of economics for readers to fully understand it.

However, A research program for experimental economics will be of great interest and value to newcomers and experts alike. While the former will discover a diverse universe of experimental approaches in economics and in the wider social sciences, its results and applications broadening their scientific horizons, the latter will find a field that can provide a new perspective on well-known problems.

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Note: This article gives the point of view of the author, and not the position of the USAPP – American Politics and Policy, nor of the London School of Economics.

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