The Methodology of Experimental Economics
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The experimental approach in economics is a driving force behind some of the most exciting developments in the field. The 'experimental revolution' was based on a series of bold philosophical premises which have remained until now mostly unexplored. This book provides the first comprehensive analysis and critical discussion of the methodology of experimental economics, written by a philosopher of science with expertise in the field. It outlines the fundamental principles of experimental inference in order to investigate their power, scope and limitations.
underlying causal relations. 5 Prediction Laboratory experimentation helps to tackle the Duhem-Quine problem constructively, or to draw tight inductive inferences from the evidence to a given hypothesis. Much philosophical literature, however, has focused on the wrong aspects of this inductive step, by stressing the importance of predictive success. In fact, the crucial advantage of the experimental method is that it allows the control of the background assumptions upon which strong inductive
role of theory A phenomenon, however, can be “freestanding” for a long time, detached from any theory or even informal explanation of its occurrence. A successful phenomenon (i.e., a phenomenon that attracts a lot of interest and becomes the focus of research in a given discipline) is usually surprising, either because it goes against our commonsensical expectations, or because it contradicts a generally accepted theory. A famous example of a surprising phenomenon is the “doughnut-shaped” shadow
theory testing was first highlighted by the French physicist Pierre Duhem. In the fifties, the philosopher Willard Orman Quine revived Duhem’s thesis in a slightly different form, and the common core of their ideas has since been labeled in the literature as the “Duhem-Quine problem.”22 The problem is not alien to experimental economists, who are in contrast well aware of its implications. Here’s Vernon Smith, for example: All tests of a theory require various auxiliary hypotheses that are
hypotheses if you want to give the criterion full normative force. There is an argument, going back to Duhem, that may be used for this purpose. In his book The Aim and Structure of Physical Theory (1906), Duhem compares the predictions made by a theory with the drawers of a filing cabinet. Each drawer has a different shape, and so do the phenomena (or “empirical laws,” as Duhem calls them) that must be stored in the cabinet. A good theory should be able to state in advance which specific drawer
write a history of mechanism design theory. P1: FYX/FGC P2: FYX 0521853408c08.xml CB906B-Guala 164 0 521 85340 0 May 30, 2005 11:31 The Methodology of Experimental Economics common in science: according to a widely shared view of scientific knowledge, the main task of the theorist is to explain spontaneously occurring and experimental processes by designing an appropriate model for each kind of causal process and the phenomena it generates. The FCC case belongs to an altogether different