Source Study: Falk & Heckman (2009) on Lab Experiments

Definition of Predictive Validity

Factors Affecting the Predictive Power of Economic Experiments

Internal vs. External Validity in Economic Experiments

Levitt and List (2007) on the Generalizability of Lab Experiments

Assessment Question: Levitt & List (2007) on Lab Experiment Generalizability

Assessing the Predictive Power of Economic Experiments

Source Study: Levitt & List (2007) on the Generalizability of Lab Experiments

Predictive Validity of a Cooperation Experiment with Brazilian Fishermen

Evaluating an Experiment on Charitable Giving

An economic experiment finds that university students, when given $20 in a controlled setting, donate an average of 35% to a designated charity. The researchers conclude that this finding likely predicts how much of their discretionary income young adults in the broader community will donate to charity. Which of the following factors poses the most significant threat to this conclusion's accuracy?

Applying Experimental Results to Policy

Two research teams design experiments to predict how farmers in a specific region will adopt a new, more expensive but drought-resistant seed.

• Team A recruits university students, provides them with a hypothetical budget, and asks them to choose between different seed options with varying costs and benefits presented on a computer screen.
• Team B recruits actual farmers from the target region, provides them with a real monetary budget, and has them make a binding choice to purchase either the traditional seed or the new seed for a small plot of their land.

Which team's experiment is likely to have greater predictive power for behavior in the target region, and why?

Evaluating the Real-World Relevance of a Laboratory Finding

An economic experiment that perfectly replicates a real-world market environment but uses a small, unrepresentative group of participants (e.g., only economics majors from one university) is likely to have high predictive power for the general population's behavior in that market.

Experimental Design Trade-offs for Prediction

Researchers conduct an experiment to understand how low-income families make grocery shopping decisions. They recruit undergraduate students from an elite university and give them a list of grocery items with prices. Participants are asked to select a week's worth of groceries for a hypothetical family of four while staying under a fictional budget of $100. The researchers aim to use these results to predict actual shopping patterns in nearby low-income communities. Which of the following modifications to the experimental design would most substantially improve its power to predict the real-world behavior of the target group?

Researchers conduct a laboratory experiment where pairs of anonymous university students play a game. Player 1 is given $10 and can send any portion of it to Player 2. The amount sent is tripled. Player 2 can then return any portion of the tripled amount to Player 1. The results are intended to measure trust and reciprocity. For which of the following real-world situations would the experimental results have the greatest predictive power?

Evaluating an Experiment on Consumer Pricing

Predictive Validity of a Cooperation Experiment with Brazilian Fishermen