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Modeling the Modeler: A Normative Theory of Experimental Design

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Listed:
  • Evan Piermon
  • Fernando Payró Chew

Abstract

We consider an analyst whose goal is to identify a subject's utility function through revealed preference analysis. We argue the analyst's preference about which experiments to run should adhere to three normative principles: The first, Structural Invariance, requires that the value of a choice experiment only depends on what the experiment may potentially reveal. The second, Identification Separability, demands that the value of identification is independent of what would have been counterfactually identified had the subject had a different utility. Finally, Information Monotonicity asks that more in- formative experiments are preferred. We provide a representation theorem, showing that these three principles characterize Expected Identification Value maximization, a functional form that unifies several theories of experimental design. We also study several special cases and discuss potential applications.

Suggested Citation

  • Evan Piermon & Fernando Payró Chew, 2024. "Modeling the Modeler: A Normative Theory of Experimental Design," Working Papers 1471, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1471
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    References listed on IDEAS

    as
    1. Stovall, John E., 2018. "Temptation with uncertain normative preference," Theoretical Economics, Econometric Society, vol. 13(1), January.
    2. Gilboa, Itzhak & Lehrer, Ehud, 1991. "The value of information - An axiomatic approach," Journal of Mathematical Economics, Elsevier, vol. 20(5), pages 443-459.
    3. , & ,, 2015. "Hidden actions and preferences for timing of resolution of uncertainty," Theoretical Economics, Econometric Society, vol. 10(2), May.
    4. Dekel, Eddie & Lipman, Barton L & Rustichini, Aldo, 2001. "Representing Preferences with a Unique Subjective State Space," Econometrica, Econometric Society, vol. 69(4), pages 891-934, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Revealed Preferences; experimental design; choice experiments;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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