The Making of Experimental Economics by Andrej Svorenčík & Harro Maas

Author:Andrej Svorenčík & Harro Maas
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Vernon SmithWe should get the mirror image of the bubble.

Charlie PlottIt should be the mirror image. I have never seen it. We should get it, but we don’t. Then we started asking why. When you do the ordinary bubble experiment you get few questions but when you do instructions for the mirror image bubble, all of a sudden, these subjects just start asking all kinds of questions that show that they don’t understand. I think that in Vernon’s [bubble experiment], they are not really understanding what is going on here in a really deep, intuitive way. I said, “Let’s test that. Why don’t we run an experiment where you can bubble. But if you buy, you can’t resell.”LXIII So there is no speculating on the other person.19

Well, as it turns out, we can get bubbles. But you can’t get them for the reason that Vernon and other people think because there is no resale here. It is not the sale of the other. [Smith: ehm] It is these guys are just flat confused about the dividend value. It is a very personal thing, not a speculation thing. That is the state of the art of why these things occur. I watch his [Vernon’s] stuff with great interest, but I’m always on the sideline skeptical. And I also try to show that their theory is wrong and I think fundamentally that it is wrong, but I haven’t been able to really prove it in good, solid ways.

But that is a very typical relationship you want to get a feeling for. It is a very healthy skepticism about replicating people’s work and how the methodologies tend to evolve.

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