Experimental practices in economics: A methodological challenge for psychologists?
This target article is concerned with the implications of the surprisingly different experimental practices in economics and in areas of psychology relevant to both economists and psychologists, such as behavioral decision making. We consider four features of experimentation in economics, namely, script enactment, repeated trials, performance-based monetary payments, and the proscription against deception, and compare them to experimental practices in psychology, primarily in the area of behavioral decision making. Whereas economists bring a precisely defined “script” to experiments for participants to enact, psychologists often do not provide such a script, leaving participants to infer what choices the situation affords. By often using repeated experimental trials, economists allow participants to learn about the task and the environment; psychologists typically do not. Economists generally pay participants on the basis of clearly defined performance criteria; psychologists usually pay a flat fee or grant a fixed amount of course credit. Economists virtually never deceive participants; psychologists, especially in some areas of inquiry, often do. We argue that experimental standards in economics are regulatory in that they allow for little variation between the experimental practices of individual researchers. The experimental standards in psychology, by contrast, are comparatively laissez-faire. We believe that the wider range of experimental practices in psychology reflects a lack of procedural regularity that may contribute to the variability of empirical findings in the research fields under consideration. We conclude with a call for more research on the consequences of methodological preferences, such as the use on monetary payments, and propose a “do-it-both-ways” rule regarding the enactment of scripts, repetition of trials, and performance-based monetary payments. We also argue, on pragmatic grounds, that the default practice should be not to deceive participants.
Perceived risk attitudes: relating risk perception to risky choice
This paper provides empirical evidence that distinguishes between alternative conceptualizations of the risky decision making process. Two studies investigate whether cross-situational differences in choice behavior should be interpreted in the expected utility framework as differences in risk attitude (as measured by risk-averse vs. risk-seeking utility functions) or as differences in the perception of the relative riskiness of choice alternatives as permitted by risk-return interpretations of utility functions, leaving open the possibility of stable cross-situational risk preference as a personality trait. To this end, we propose a way of assessing a person's inherent risk preference that factors out individual and situational differences in risk perception. We document that a definition of risk aversion and risk seeking as the preference for options perceived to be more risky or less risky, respectively, provides the cross-situational stability to a person's risk preference that has eluded more traditional definitions. In Experiment 1, commuters changed their preferences for trains with risky arrival times when the alternatives involved gains in commuting time rather than losses. However, changes in preference coincided with changes in the perception of the riskiness of the choice alternatives, leaving the perceived risk attitudes of a majority of commuters unchanged. Experiment 2, a stockmarket investment task, investigated changes in risk perception, information acquisition, and stock selection as a function of outcome feedback. Investors' stock selections and their perception of the risk of the same stocks were different in a series of decisions in which they lost money than in a series in which they made money. As in Experiment 1, differences in choice and in risk perception were systematically related, such that the majority of investors had the same preference for perceived risk in both series of decisions. Our results provide empirical support for the usefulness of recent risk-return conceptualizations of risky choice (Bell [Bell, D. E. 1995. Risk, return, and utility. Management Sci. 41 23--30.], Jia and Dyer [Jia, J., J. S. Dyer. 1994. A standard measure of risk and risk-value models. Working paper, University of Texas at Austin.], M. Weber and Sarin 1993).
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