Debates on fundamental philosophical issues such as the problem of realism, the concept of a law of nature, the problem of theory-change, have been drastically transformed by this revolution. What is an economic theory? What does it explain? What is its relationship with the reality it aspires to describe and control? And again, what kind of knowledge can one gain by doing controlled experiments? What can the latter teach us about real economies out in the wild? In what follows, we shall begin by quickly reviewing the kind of work done by experimentalists and the reactions of the profession to their findings.
Social Science Research
Then, we shall point to some interesting methodological issues experimentalists urge us to think about. For the purposes of the present paper, a brief sketch should suffice.
Their distinction also provides a useful taxonomy of the kind of work done today. The first line is that of market experiments. His purpose was to show that neoclassical equilibrium theory could not provide the right framework of analysis even for simple 'classroom markets'. Vernon Smith, now director of the University of Arizona laboratory, improved upon Chamberlin's work and actually showed that many trading institutions do produce patterns of prices converging rapidly towards equilibrium. The main result of these early experiments was to show that auction mechanisms make a big difference for the functioning of the market.
Since then, the investigation of the properties of markets and the design of institutions has flourished and, as we shall see, has led to some useful and interesting applications. Early work soon delivered a series of 'paradoxes' and anomalies affecting expected utility theory both in its positive and normative interpretation. Violations of expected utility axioms stimulated in the late seventies and eighties the formation of alternative explanations of individual choice behaviour, mainly by experimental psychologists, and of generalised theories of decision making encompassing the received theory as a special case.
The path leading to a certain equilibrium could also be followed closely in a controlled environment. Laboratory experimentation also provided game theorists with the possibility of testing models under the idealised conditions postulated in their assumptions, like for instance complete information or common knowledge in bargaining situations, and the robustness of their prediction outside such conditions.
Chapter 2. Sociological Research
New phenomena were observed and replicated this way, and their properties investigated. The effects and causes of players' sense of fairness, justice and trust are also receiving much attention today after many years of tests on ultimatum games, free-riding behaviour, and other phenomena of direct relevance to social policy and public goods analysis.
Theorists tend to be considered the elite of the discipline in many fields, and even in physics there has been a tendency towards a progressive separation of 'high' theory from experimental practice. In some countries like Britain, for instance, departments of mathematical physics work independently from departments of applied physics. Some highly praised research programmes such as superstring theory have been going on for decades without the slightest empirical feedback. Even the bad practices commonly attributed to econometricians seem to be not so uncommon in the 'hard' sciences.
The cost of experimenting with particles accelerators and the development of computer techniques for analysing data, for example, has raised among physicists the worry that "in a few years [ The rise of EE took place against the background of a generally hostile profession. With few theoretical economists spending their time in justifying their highly mathematised models, some of very remote practical applicability, experimentalists felt the need to justify their approach to a degree that is quite unusual in other established fields of research.
This does not mean, however, that their methodological accounts are more accurate or philosophically better informed. In this respect the reader may compare the three following quotations from Greenaway, Bleaney and Stewart ? Ian Stewart the 'mefhodologist' first tells us that. O'Brien discusses theory and empirical observation in economics.
He begins by setting forth his central thesis. It is that, if any science is to make progress, it must engage in choices between theories, and that the principal role of data is to facilitate this process of theory choice. In his first main section, he explores the potentials and pitfalls that economists face in using data.
2.1. Approaches to Sociological Research
They are likely to remain so in the interest of analytical tractability. This means that they can give us insights into the real world, but they cannot tell us how it works. These insights are powerful in the sense that they can change our whole way of thinking about issues, but they are also powerfully dangerous if we mistake the model for reality itself, p.
This is equally true of economics. Theorizing generates testable propositions; exposing those propositions to data using empirical methods, which range from the casual to the sophisticated, generates results. In turn these results may provide support for a specific hypothesis, or may give cause for rethinking the theoretical basis to the problem. In some ways the basic process is more complicated in economics than in other disciplines, largely because the process of data generation is rather different, certainly than is the case in the natural sciences.
Of course it is by no means an easy question, surely not a question that one can answer in a short paper like the present one. We will limit ourselves, therefore, to asking why economists have so long ignored the results obtained by experimentalists. First, until the seventies expected utility and game theory were quite peripheral fields in neoclassical economics.
Most research programmes, after all, are born and grown up in an 'ocean of anomalies' Lakatos, It is far from easy, however, to summarize in a coherent way a position where, especially among scholars interested in 'pure' economic theory, we often find a strange mixture of rationalism and empiricism which may be labelled as 'empirical apriorism'. One of these strategies is concerned with the realisticness of assumptions and the other with the method of 'diminishing abstractions' or, as is more often said, successive approximations.
Both these strategies, of course, are taken to work for logically coherent theories. On the other hand, particularly among 'applied' economists, the popular characterization of economic methodology is a strange mixture of the hypothetico-deductive model of scientific explanation together with an eclectic combinations of disparate clues from Kuhn, Popper and Lakatos such as the one we may find at the beginning of the latest edition of Lipsey's textbook Obviously enough, one of the main consequences of that methodological dichotomy is the problematic coexistence of 'theory' and 'applications' within the discipline, in the sense that, while applied sub-disciplines often claim to take their clues from the highly praised 'pure' theory, the feed-back effect of the empirical evidence collected by the former is much more difficult to detect.
Social Research Methods - Knowledge Base - Deduction & Induction
Although an important portion of EE such as the empirical assessment of the expected utility theory is explicitly and directly devoted to appraising fundamental economic theories, the results obtained have often been serenely ignored by the challenged pieces of 'pure theory': a clear instance of the ubiquitous problem of the imperfect interconnections between 'pure theory' and 'applied research' in economics. Note that, differently from other fields of economic research, theorists are perfectly aware of those experimental results that are relevant for the concerned theory.
Even if the attitude of choice theory scholars today is not as open as that of game theorists in the '50s and early '60s about whom Roth , p. Also, complete and transitive preferences imply the existence of an ordinal utility function, which the additional assumptions make interval. Introspection supports the ordinal more than the interval conclusion [sic! Hence, introspection and logic both suggest the added and replacements assumptions as first candidates for reexamination. Neuberg, , p. Like many other applied fields in economics, such applications, indeed, have ended up forming a separate field of research whose feed-back effects on the corresponding 'theory', if any, are far from evident.
In The New Palgrave, for instance, the entry on 'Auctions' is by Vernon Smith c , who describes in some detail the relevant features of different types of auctions and summarizes the results of some experimental tests of auction market behaviour; but in another entry?
Robert Wilson , p. This literature relies on the game-theoretic perspective that emphasizes the implications of complete optimizing behaviour. Omitted here are the experimental studies that offer alternative predictions of bidder behaviour. This is an advantage in several respects. Knowledge of the disturbing factors is usually less precise, structured and reliable than our knowledge of the factors modelled in the theory.
If this was not the case, of course, we would try to model these factors explicitly as part of the theory. Secondly, it allows a careful handling of the tricky hypothesis of 'continuity' between different domains where different causal factors are at work. See what's been added to the collection in the current 1 2 3 4 5 6 weeks months years. Your reader barcode: Your last name:. Cite this Email this Add to favourites Print this page. You must be logged in to Tag Records.
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Founding experiments in sociology are compared to founding experiments in physics to demonstrate fundamental cross-disciplinary similarities of theory, experiment, and scientific method. Finally, the book explains how experimental research and theory can be applied in historical and institutional studies. This book will be a key resource in social science methodology courses at all levels. Theory and the Scientific Method. Empirically Driven Experiments. TheoryDriven Experiments.