Binmore and Shaked - Experimental Economics Flashcards
(8 cards)
What do they say about preduction as it realtes to science vs economics?
Scientists also attach much importance to replication which is something that can’t be done as it relates to data gathered in economic laboratories.
They observe that Fehr and Schmidt don’t keep the distribution of parameters constant. What is the issue with this?
Fitting a model to new data is not the same thing as predicting new data with a model whose parameters have been calibrated with exisiting data.
What is evidence that there is limited predictive power in key games?
The model struggles to explain the persistent decline in cooperation rates over time, even among inequity averse participants (in public goods game without punishment).
What were they concerns around the conclusions made in public goods game without punishment?
That Fehr and Schmidt chose only to predict the partner design (repeated interaction, final round) rather than the standard stranger design (one shot).
What are the concerns that Binmore and Shaked have on refinement?
The experimental games used by Fehr and Schmidt often involve mutliple equilibria. The selection of a specific eqm might reflect beliefs or fairness expectations rather than utility from inequity aversion.
How do they claim that Fehr and Schmidt distort the empricial distribution types as it relates to three contract games?
Fehr and Schmidt drop 30% of the subject pool (those with “outlier” parameters) to align with their theory, and so makes cross game comparisons invalid.
What is their preferred explanation for explaining some of the behaviour observed?
Favor explaining behavior in terms of social norms triggered by experimental framing. They cite the work of Henrich et al. (including Fehr) on cross-cultural differences in economic behavior, which suggests that culturally determined behavior and exposure to market economies are correlated, potentially supporting a social norm explanation over hardwired, culture-independent utility functions.
What is an issue with backward induction claimed by these authors?
Widely considered a poor predictor of experimental behaviour by game theorists - not always robust.
