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Bridging the Gap between Psychology and Experimental Economics

- December 13, 2007

Leaf through an issue of one of the leading political science journals these days and you’re likely to spot something you wouldn’t have seen just a few years ago: articles reporting on experimentally-based research.

Times have changed, as documented here. Experiments (laboratory, survey, quasi-, and natural) are all the rage these days in political science.

No longer, though, is experimentation the sole province of psychologically-oriented political scientists. In recent years, as economists discovered the experimental method (or, as many of them seem to think, as they invented it), a new variant of experimentation has made ts presence felt in political science.

In a brief article (abstract here) in the current issue of Current Directions in Psychological Science, Dan Ariely and Michael Norton analyze the wide gap currently separating psychologically- and economically-based experimental research — a gap clearly perceptible in experimental work within political science, a heavy borrower from both psychology and economics.

“Psychologists have not traditionally been interested in the efficiencies and design of markets,” Ariely and Norton note, “while experimental economists have not customarily focused on emotion, memory, or implicit cognition.” However, to some extent this substantive gap has been closing, as the two fields converge on subjects like racial and gender discrimination or altruism and charitable giving. “Even in these cases, however, the work of the other discipline often goes unrecognized.” To account for this lack of productive interaction, Ariely and Norton point to what they call “a gap in abstraction”:

bq. When economists bring a phenomenon into the lab, they engage in abstraction in order to create laboratory tasks that capture the essential elements of that phenomenon. For economists, these elements are derived from their general normative theory — that behavior is driven by utility maximization. As a result, economists place a great deal of emphasis on ensuring that the incentives in an experiment represent the incentives in the real world and that participants have full information about the monetary costs and benefits associated with different courses of action, so that they can maximize their utility (payment).

bq. For psychologists, people’s decisions are sensitive to contextual factors of specific situations, and they therefore select manipulations — from smoke pouring into rooms to subliminal primes — that alter people’s goals in the way that actual situations might alter those goals in the real world. …As part of this effort, psychologists often use cover stories, confederates, and deception, as they try to ensure that people are acting in response to those factors as they would in the real world.

This gap in abstraction, Ariely and Norton contend, is “at least partly the reason psychologists and experimental economists fundamentally differ on the role of (or need for) both deception and incentives in experiments.” It’s not just that psychologists enjoy lying to people while economists enjoy paying them. To find out what they want to find out, psychologists have to give their experimental subjects a “cover story” and transport them into a particular situation, for which purposes deception is often necessary. By contrast, economists want to know about experimental subjects’ ability to make informed decisions, and for that purpose deception would be counterproductive. At the same time, economists want to motivate their subjects to behave “normally,” so they explicitly define incentives to enable subjects to evaluate the costs and benefits of a particular course of action. “Psychologists, on the other hand, tend to believe that the costs and benefits of different courses of action in the real world are often unclear, such that defining incentives clearly can make laboratory situations less like real-world situations.”

Can the gap be bridged? Ariely and Norton offer some hints about how this could happen:

bq. Experimental economists might shift from asking whether deception is good or bad — a moral question — to exploring whether deception helps or harms social scientists’ ability to understand human behavior. Psychologists’ aversion to incentives, on the other hand, might be addressed by taking a broader view of what experimental economists are trying to accomplish with them: making people care about their behavior as much in the lab as they do in the real world.

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