Experimental Methods and the Welfare Evaluation of Policy Lotteries
AbstractPolicies impose lotteries of outcomes on individuals, since we never know exactly what the effects of the policy will be. In order to evaluate alternative policies, we therefore need to make some assumptions about individual preferences, even before social welfare functions are applied. Instead of making a priori assumptions about those preferences that are likely to be wrong, there are two broad ways in which experimental methods are used to evaluate policy. One is to use experiments to estimate individual preferences, valuations and beliefs, and use those estimates as priors in the evaluation of policy. The other approach is to undertake deliberate randomization, or exploit accidental or natural randomization, to infer the effects of policy. The strengths and weaknesses of these approaches are reviewed, and their complementarities identified.
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Bibliographic InfoPaper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2011-08.
Date of creation: Apr 2011
Date of revision:
Other versions of this item:
- Glenn W. Harrison, 2011. "Experimental methods and the welfare evaluation of policy lotteries," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(3), pages 335-360, August.
- NEP-ALL-2011-04-30 (All new papers)
- NEP-CBE-2011-04-30 (Cognitive & Behavioural Economics)
- NEP-EXP-2011-04-30 (Experimental Economics)
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- Charness, Gary & Viceisza, Angelino, 2012.
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University of California at Santa Barbara, Economics Working Paper Series
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