Information For Participants in Experimental Economics
What is Experimental Economics? | Frequently Asked Questions
What is Experimental Economics and Public Policy?
Suppose you get on an airplane and the pilot announces, “In a few minutes we’ll be taking off on the inaugural flight of this plane. We expect it to cut your travel time in half. We’ve haven’t actually tested the plane—but our panel of experts is confident it will be the fastest, safest plane ever built. Fasten your seatbelts.”
Would you stay on that plane? I doubt it. Before airplanes are approved for commercial travel, they’re tested in wind tunnels and flown by test pilots, to work out all the kinks. Why would an airline operate an untested plane when the costs of failure are so great—and can easily be avoided?
We can ask the same question about new public policies. Changes in government policies—such as new fisheries regulations—can have major effects on people’s lives. Should we support a proposed but untested policy based solely on the testimony of experts, or people with some stake in the outcome?
That’s where the growing field of experimental economics comes in. Experimental economics uses controlled, scientific experiments to test what choices people actually make in specific circumstances. In 2002, Vernon Smith won the Nobel Prize in Economics for developing a methodology that allows researchers to test proposed new policies before they are implemented.
Here’s how it works. Researchers design an experiment that captures the key features of some “real world” market under study. People who have agreed to take part in the experiment are assigned the roles of buyers and sellers making trades. Participants have an incentive to think carefully about their decisions, since the money they earn from trading is theirs to keep.
During the experiment, researchers can change the rules of exchange and the incentives—and by observing how the participants’ behavior changes as the rules or incentives change, they can examine the effects of policy changes. They can then compare the actual results of the experiment with theoretical predictions about how people would respond to some policy change.
Besides experiments in the laboratory, Resource Economics professors also use experiments in classrooms, to give students hands-on experience with the power of markets and incentives. Students see how economics can explain what goes on in the real world—and how those same economic concepts can help policymakers make better decisions.
Experimental economics could be useful in many policy debates. We might, for example, want to study the relative merits of different carbon trading programs, or the incentive properties of different fisheries management proposals. Other projects which have been undertaken by members of our lab include investigations into theoretical solutions to noncompliance with environmental regulation as well as using experimental economics to discriminate between competing models that may explain firms’ anticompetitive behavior.
In the last 20 years or so, the field of experimental economics has undergone tremendous growth nationally and internationally. The experimental economics program in the Department of Resource Economics brings the benefits of this growing field to UMass.
Frequently Asked Questions
Who are we and why are we doing this?
Throughout the school year, Professors John Spraggon, Angela C. M. de Oliveira Tom Stevens, Christian Rojas and John Stranlund of the Department of Resource Economics will be conducting a variety of decision-making experiments as a part of our research. We are looking for subjects to participate in upcoming experiments. Whenever we schedule an experiment, we will send an email looking for participants.
When you receive an email announcement, if you want to participate in the experiment simply follow the instructions in the email.
What will you do with my email address?
We will only use your email address for recruiting participants in experiments. We will keep these email addresses confidential and will not share them with anyone else.
How often will I be getting emails?
It depends on when we are running experiments. At most, you might get one or two emails in a week. There will also be periods when we are not running experiments, so you might not hear from us for a month or two.
What are these experiments like?
The types of experiments will vary. The experiments typically involve some sort of decision-making exercise or possibly completing a survey. Our experience has been that participants usually enjoy the experiments and ask to participate again in the future.
Are there any risks to me?
Absolutely not. Nothing in these experiments will put you at risk in any way. Before conducting these experiments, the University closely reviews what we will be doing to ensure that there are no risks to students. In the unlikely event that you are not comfortable with some aspect of the experiment, you are free to leave at any time. All information you share with us and all aspects about your participation in the experiments will be kept strictly confidential.
How much will I earn?
We understand that your time is valuable, so if you participate in an experiment, you will be compensated for your time. We pay participants in cash at the end of the experiment. Since each experiment will vary, the email asking for participants will provide more details. Typically, you will be given some money just for showing up on time, and then have an opportunity to earn more during the experiment.
How long do the experiments take?
It varies. The email will describe the time commitment for that particular experiment. Typically, an experiment lasts one to two hours. Some experiments may ask you to commit for two days, two hours per day. Dates, times and details will be given in the email.
We do have one request…
If you sign up for our email database, you are only committing to receiving the emails and are under no obligation to participate in an experiment. However, we do ask that once you agree to participate you honor that commitment. It costs us a lot of time and money when people fail to show up. If you do not show up for an experiment that you signed up for, you will be removed from our database and will not be allowed to participate in the future.