LE LEC Fabrice

The experimental measurement of social preferences has led to somewhat equivocal results. The experimental Equality Equivalence Test proposed by Kerschbamer (2015) is a promising, simple, model-free and comprehensive tool for eliciting distributional social preferences. We here assess the validity of this method by modifying it so that we can test its key assumption: that the strength of the concern for the inactive player depends only on whether her payoff is above or below that of the decision-maker. In general, we find that this assumption holds. Moreover, the prevalence of types of social preferences that we observe is similar to that in the original paper, with selfish and quasi-maximin (Charness and Rabin 2002) being the most common.

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Decisions under risk are often embedded in a social context that we usually abstract from when studying decision-making in the laboratory. In contrast to that practice, our experiment investigates whether risk-taking is affected by social comparisons. In particular, we focus on situations where some amount of money has to be allocated to two parties: either the amount can be shared, or a random device allocates the entire amount to one of the parties. We find that the social context of the decision matters strongly: When participants are in a disadvantageous initial position compared to the other party, they select the risky option much more often than in a purely individual decision, identical in all other respects. Overall, we find that individuals are relatively more risk-seeking in the socially unfavorable domain than in isolation, in contrast to the favorable one, where we find no or little change in elicited risk attitudes in comparison to an isolated decision.

This Handbook provides an overview of the experimental methods used in economics. These methods have been developed to observe the behavior of "economic agents" in situations that replicate those in which the economist is interested, but in a controlled environment. On this basis, the tools presented in this booklet make it possible to test the predictions and empirical content of economic theory, to bring to light new stylized facts about the functioning of situations poorly understood by theory, or to inform public policy-making. This wide range of objectives explains why these methods have become very common in applied economics, and why their use has spread beyond economics to fields such as marketing, management, and so on. The book presents a detailed treatment of the main tools available to measure different aspects of economic behavior: individual decisions under certainty and uncertainty, intertemporal choices, strategic interactions, social preferences and resource allocation mechanisms. The book also presents the methodological criteria for assessing the theoretical and empirical relevance of the data collected using these tools.

This Handbook provides an overview of the experimental methods used in economics. These methods have been developed to observe the behavior of "economic agents" in situations that replicate those in which the economist is interested, but in a controlled environment. On this basis, the tools presented in this booklet make it possible to test the predictions and empirical content of economic theory, to bring to light new stylized facts about the functioning of situations poorly understood by theory, or to inform public policy-making. This wide range of objectives explains why these methods have become very common in applied economics, and why their use has spread beyond economics to fields such as marketing, management, and so on. The book presents a detailed treatment of the main tools available to measure different aspects of economic behavior: individual decisions under certainty and uncertainty, intertemporal choices, strategic interactions, social preferences and resource allocation mechanisms. The book also presents the methodological criteria for assessing the theoretical and empirical relevance of the data collected using these tools.

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The experimental method has profoundly influenced recent developments in economic science. The use of experiments, and its quasi-systematic character from the 1990s onwards, has allowed the development of an empirical evaluation of both the hypotheses on which the theoretical analysis is based (e.g. how many actors are needed to make sense of the notion of atomicity, which translates empirically into agents who behave as price-takers? What time horizon replicates the notion of an infinitely repeated game, whose essential consequence is to make contemporary decisions independent of future events?), but also predictions of specific models (the supply-demand equilibrium in a market, the formation of prices and the allocation of a good in an auction). Experimental economics has thus demonstrated the relevance and validity of certain theoretical approaches, despite often very strong assumptions about individual and social behavior, but also their limitations in a number of other situations. The two winners of the "Nobel Prize in Economics" (or the Bank of Sweden Prize in memory of Alfred Nobel), whose distinction was explicitly motivated by their experimental contributions, illustrate this tension perfectly: Vernon Smith's work shows that, for certain well-defined trading institutions, markets function in a way that is very consistent with the theory of pure and perfect competition, even though most of the underlying assumptions of this theory are, at best, moderately satisfied. On the other hand, Daniel Kahneman, co-winner the same year, received the prize for his evidence of cognitive biases and a tendency for individuals to deviate from the canons of rationality put forward in microeconomic models. On the basis of this tension and in close connection with experimental economics, a new field of research has developed, behavioural economics, whose objective is to enrich and improve the theoretical approach to individual and social decisions on the basis of psy-chological regularities. The aim is to incorporate into the canonical models the non-monetary motivations and the less-ego¨ıst inclinations of individuals, or the cognitive shortcuts on which they may base their decisions, or even possible inconsistencies in behavior. The results of experimental economics, at least the most robust and most often replicated ones, are no longer the subject of debate within the discipline, and the behavioral approach has gradually spread to all fields of economic analysis.

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Abstract When taking into account the chances of success, strategic mating motivations do imply a bias not toward the most attractive individuals, but toward average or mildly attractive individuals, undermining the explanation of Maestripieri et al. at a fundamental level. This leaves open the possibility of alternative explanations and calls for a full-fledged explicit model of courtship behavior.

We present the implementation of an economic experiment conducted simultaneously in 11 French cities, with over 2700 participants, during four uninterrupted hours, during a popular-science event held in September 2015. Our goal is both to provide a roadmap for a possible replication and to discuss how the discipline can invest in new fields (science popularization, popular education, public communication).

The purpose of this thesis is to present four essays in behavioral and experimental economics on decision making under risk and ambiguity. The first essay provides a synthesis and perspective on the representativeness of experimental results on preferences: social preferences and preferences regarding risk and time in developed and developing countries. The second essay experimentally explores the effect of risk and ambiguity on infinite horizon job search behavior. The results show that under risk and ambiguity, reservation wages are lower than theoretical values and decrease during the search process. Similarly, subjects behave as ambiguity neutral agents. The third and fourth trials investigate the effect of social context and the correlation of payments on attitudes toward risk and ambiguity in the gain, loss, and mixed domains, respectively. The results show that the introduction of social context has a significant effect on risk attitudes in all three domains. Nevertheless, risk correlation has an effect on risk attitudes only in the mixed domain. Attitudes toward ambiguity vary by domain. Similarly, correlation of payments decreases ambiguity aversion.

This paper investigates why some individuals tend to adopt conformist consumption behaviors. Specifically, we focus on the analysis of intrinsic preferences for conformity: individuals' preferences would tend to converge towards those of others, even in contexts where there is no uncertainty about the quality of goods and where individuals' choices cannot be observed. To this end, we designed an experiment in which subjects reported the satisfaction provided by two common goods tested in the laboratory and then gave a monetary evaluation. In a first treatment, subjects were "isolated", while in a second treatment, information on the choice made by other subjects was provided just before the monetary evaluations of the goods. Our results show that subjects are sensitive to the choices of others in an asymmetric way. When subjects report greater satisfaction with the good also chosen by others, this information does not affect the monetary valuation of the goods. On the other hand, subjects with different tastes from others tend to reduce the difference in valuation between the preferred good and the other.

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Based on experimental Dictator Games with probabilistic prospects, Brock, Lange, and Ozbay (2013) conclude that neither ex post nor ex ante comparisons can fully account for observed behavior. We argue that their conclusion that ex ante comparisons cannot explain the data is at best weakly supported by their results, and do so on three grounds: the absence of significant differences between the most relevant treatments, the implicit assumption of subjects' risk neutrality, and the asymmetry of treatments regarding the disclosure of dictators' choice.

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We propose an experimental method whose purpose is to remove social concerns in games. The core idea is to adapt the binary-lottery incentive scheme, so that an individual payoff is a probability to see one's preferred social allocation implemented. For a large class of social preference models, the method induces payoffs in the game that are in line with subjects' (social) preferences. We test the method in several popular experimental games, contrasting behaviors with and without our methodology. Our results suggest that a substantial part of the difference between predictions based on selfishness and observed behaviors seems driven by such preferences , since our method does induce more " selfish " behaviors. But they also indicate that a considerable share is left unexplained, perhaps giving weight to alternative explanations or other types of social concerns.

The thesis aims at characterizing the aversion of individuals to major risks. This characterization is based on the notion of willingness to pay (to avoid this type of risk) and mobilizes Quiggin's (1982) expected utility (EU) and rank-dependent expected utility (RDEU) models. These two models allow for an identical treatment of monetary consequences, but differ in their treatment of probabilities. In the context of major risks, this results under UEDR in a potentially very large overvaluation of very small probabilities. Based on a method of approximating willingness-to-pay that is well suited to the major hazard framework, we show that the willingness-to-pay of a UEDR individual can be substantially higher than that of an EU individual. In particular, the magnitude of this difference in willingness to pay is strictly equivalent to the magnitude of the subjective overvaluation of very small objective probabilities of loss. In addition to this theoretical result, the thesis conducts an experimental investigation, using the Tradeoff elicitation method (Deneffe and Wakker, 1996), which confirms the standard result of the UEDR model that individuals overweight very small probabilities. The experiment also shows that the smaller the objective probability, the greater the overweight. Finally, based on the theoretical and experimental results of the thesis, we evaluate the case of the subjective cost of a major risk, in particular of a serious nuclear accident. Our results show that this cost is reflected in consents to pay that are much higher under UEDR than under UE. These differences in willingness-to-pay between the two models clearly show the impact of the magnitude of the overweighting of very small probabilities on the characterization of individuals' behavior towards major risks.

Economic crises bring to the fore deep issues for the economic profession and their models. Given that cognitive science shares with economics many theoretical frameworks and research tools designed to understand decision-making behavior, should economists be the only ones re-examining their conceptual ideas and empirical methods? We argue that economic crises demonstrate different forms of uncertainty, which remind cognitive scientists of a pervasive problem: how best to conceptualize and study decision making under uncertainty.

The emergence of behavioral economics tends to show that game theory is based on principles that are challenged both empirically and theoretically. Behavioral economics models have been developed in profusion to account for such deviations, but in an incomplete way: they are often contradictory to each other and they imply a weakening of the formal elegance and unification of the theory (chapter 2). A key question is therefore whether it is possible to grasp these patterns within a unified framework. A scheme that generalizes economic behavior beyond that which can be explained by the preference optimization model is proposed here. It is shown that if these behaviors are determined by consistent decision processes, then there is an equilibrium for all strategic interactions (chapter 3). Many types of behavior satisfy this consistency condition. An equilibrium can thus exist with highly heterogeneous agents - different preferences, different levels of rationality, different "behavioral motives" (chapter 4). It is shown that such a behavioral equilibrium could be the resting point of a general class of learning processes (chapter 5). A frequency extension of the behavioral equilibrium is proposed, to capture non-convex behaviors (chapter 6). The behavioral equilibrium is then extended to abstract economies, and a general equilibrium model is proposed, in particular by considering that agents are endowed with decision process functionals (chapter 7).