NUI Maynooth Talk 7th Nov 2008

Computable and Experimental Economics at theUniversity of Limerick

Stephen Kinsella

Dept. Economics,University of [email protected]

www.stephenkinsella.net

November 5, 2008

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

1 Computable Economics

2 Experimental Economics

3 iCEEL

4 An Experiment

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)

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)

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.

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

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.

So What?

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

New Lab, New KBS

20 Computers, proper partitions, servers, software, etc

Mobile Lab (20 Laptops)

Trading Simulation Floor

Jan 2009

New Lab, New KBS

Jan 2009

New Lab, New KBS

Jan 2009

New Lab, New KBS

Jan 2009

New Lab, New KBS

Jan 2009

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

Collaboration!

Figure: caption

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.

NUI Maynooth Talk 7th Nov 2008

Technology

Transcript of NUI Maynooth Talk 7th Nov 2008