Computable and Experimental Economics at theUniversity of Limerick

Stephen Kinsella

Dept. Economics,University of Limerick.stephen.kinsella@ul.ie

www.stephenkinsella.net

November 5, 2008

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 1 / 14

Today

1 Computable Economics

2 Experimental Economics

3 iCEEL

4 An Experiment

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 2 / 14

By way of a preamble. . .

But I believe that there is no philosophical highroad in science,with epistemological signposts. . . we are in a jungle and find ourway out by trial and error, building our road behind us as weproceed. We do not find signposts at crossroads, but our scoutserect them, to help the rest.

––Max Born, Experiment and Theory in Physics (1943)

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 3 / 14

What is Computable Economics?

we, as economic theorists, tend to ‘formulate thequestions’ in the language of a mathematics that thedigital computer does not understand—classical realanalysis—but ‘get together the data’ that it does,because the natural form in which economic dataappear is in terms of integer, natural or rationalnumbers. The transition between the two domainsremains a proverbial black box. . .

–(3, pg. 4)

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 4 / 14

An ExampleIntermediate Value Theorem

Theorem (Intermediate Value Theorem)

Let f : R −→ R be a continuous function from the closed interval [a, b] toR and let f (a) < 0 and f (b) > 0. Then ∃x ∈ R and a < x < b such thatf (x) = 0.

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 5 / 14

Figure: Example of a fixed point. Intermediate Value Theorem underpins fixedpoint theorems, which underpin general equilbrium theory.

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 6 / 14

An ExampleConstructive Intermediate Value Theorem

Theorem (Constructive Intermediate Value Theorem)

Let f : R −→ R be a continuous function, from [a, b] ∈ R to R, and letf (a) < 0, f (b) > 0; then ∀ε > 0, ∃x ∈ R such that a < x < b subject to|f (x)| < ε.

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 7 / 14

So What?

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 8 / 14

Definitions & Pioneers

Defined as the use of experimental methods to evaluate theoreticalpredictions of economic behaviour (1).

Uses controlled, scientifically designed experiments to test economictheories under laboratory conditions.

Pioneered by Smith (1962), Kahenman & Tversky (1979)

Modern variants: Behavioural game theory, neuroeconomics, fieldexperiments, computable experimental economics

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

Definitions & Pioneers

Defined as the use of experimental methods to evaluate theoreticalpredictions of economic behaviour (1).

Uses controlled, scientifically designed experiments to test economictheories under laboratory conditions.

Pioneered by Smith (1962), Kahenman & Tversky (1979)

Modern variants: Behavioural game theory, neuroeconomics, fieldexperiments, computable experimental economics

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

Definitions & Pioneers

Defined as the use of experimental methods to evaluate theoreticalpredictions of economic behaviour (1).

Uses controlled, scientifically designed experiments to test economictheories under laboratory conditions.

Pioneered by Smith (1962), Kahenman & Tversky (1979)

Modern variants: Behavioural game theory, neuroeconomics, fieldexperiments, computable experimental economics

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

Definitions & Pioneers

Defined as the use of experimental methods to evaluate theoreticalpredictions of economic behaviour (1).

Uses controlled, scientifically designed experiments to test economictheories under laboratory conditions.

Pioneered by Smith (1962), Kahenman & Tversky (1979)

Modern variants: Behavioural game theory, neuroeconomics, fieldexperiments, computable experimental economics

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 10 / 14

iCEEL

New Lab, New KBS

20 Computers, proper partitions, servers, software, etc

Mobile Lab (20 Laptops)

Trading Simulation Floor

Jan 2009

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

iCEEL

New Lab, New KBS

20 Computers, proper partitions, servers, software, etc

Mobile Lab (20 Laptops)

Trading Simulation Floor

Jan 2009

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

iCEEL

New Lab, New KBS

20 Computers, proper partitions, servers, software, etc

Mobile Lab (20 Laptops)

Trading Simulation Floor

Jan 2009

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

iCEEL

New Lab, New KBS

20 Computers, proper partitions, servers, software, etc

Mobile Lab (20 Laptops)

Trading Simulation Floor

Jan 2009

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

iCEEL

New Lab, New KBS

20 Computers, proper partitions, servers, software, etc

Mobile Lab (20 Laptops)

Trading Simulation Floor

Jan 2009

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

Social aspects of risky investments

4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment

We alter access to trustees, & change participant’s information levelswith regard to the trustworthiness of these trustees

We think as we increase information about principal to agent, trust,and risky behaviour alters (author?) (2)

Obvious real world applications

Extra dimension: culture

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

Social aspects of risky investments

4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment

We alter access to trustees, & change participant’s information levelswith regard to the trustworthiness of these trustees

We think as we increase information about principal to agent, trust,and risky behaviour alters (author?) (2)

Obvious real world applications

Extra dimension: culture

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

Social aspects of risky investments

4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment

We alter access to trustees, & change participant’s information levelswith regard to the trustworthiness of these trustees

We think as we increase information about principal to agent, trust,and risky behaviour alters (author?) (2)

Obvious real world applications

Extra dimension: culture

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

Social aspects of risky investments

4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment

We alter access to trustees, & change participant’s information levelswith regard to the trustworthiness of these trustees

We think as we increase information about principal to agent, trust,and risky behaviour alters (author?) (2)

Obvious real world applications

Extra dimension: culture

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

Social aspects of risky investments

4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment

We alter access to trustees, & change participant’s information levelswith regard to the trustworthiness of these trustees

We think as we increase information about principal to agent, trust,and risky behaviour alters (author?) (2)

Obvious real world applications

Extra dimension: culture

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

Collaboration!

Figure: caption

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 13 / 14

References

[1] John H. Kagel and Alvin E. Roth. Handbook of ExperimentalEconomics. Princeton University Press, New Jersey, USA, 1997.

[2] A. R. Soetevent. Empirics of the identification of social interactions:An evaluation of the approaches and their results. Journal of EconomicSurveys, 20(2):193–228, 2006.

[3] K. V. Velupillai. Computability, Complexity and Constructivity inEconomic Analysis. Blackwell Publishing, 2005.

Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 14 / 14