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Exploring the Meaning of Significance in Experimental Economics

Author

Listed:
  • Andreas Ortman

    (School of Economics, Australian School of Business, the University of New South Wales)

  • Le Zhang

    (School of Banking and Finance, Australian School of Business, the University of New South Wales)

Abstract

Null Hypothesis Significance Testing has been widely used in the experimental economics literature. Typically, attention is restricted to type-I-errors. We demonstrate that not taking type-II errors into account is problematic. We also provide evidence, for one prominent area in experimental economics (dictator game experiments), that most studies are severely underpowered, suggesting that their findings are questionable. We then illustrate with several examples how poor (no) power planning can lead to questionable results.

Suggested Citation

  • Andreas Ortman & Le Zhang, 2013. "Exploring the Meaning of Significance in Experimental Economics," Discussion Papers 2013-32, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2013-32
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2013-32.pdf
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    Citations

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    Cited by:

    1. Brodeur, Abel & Cook, Nikolai & Heyes, Anthony, 2022. "We Need to Talk about Mechanical Turk: What 22,989 Hypothesis Tests Tell us about p-Hacking and Publication Bias in Online Experiments," GLO Discussion Paper Series 1157, Global Labor Organization (GLO).
    2. Moffatt, Peter G., 2021. "Experimetrics: A Survey," Foundations and Trends(R) in Econometrics, now publishers, vol. 11(1-2), pages 1-152, February.
    3. Neyse, Levent & Fossen, Frank M. & Johannesson, Magnus & Dreber, Anna, 2023. "Cognitive reflection and 2D:4D: Evidence from a large population sample," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 288-307.
    4. Eszter Czibor & David Jimenez‐Gomez & John A. List, 2019. "The Dozen Things Experimental Economists Should Do (More of)," Southern Economic Journal, John Wiley & Sons, vol. 86(2), pages 371-432, October.
    5. Kathryn N. Vasilaky & J. Michelle Brock, 2020. "Power(ful) guidelines for experimental economists," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 6(2), pages 189-212, December.
    6. Leah H. Palm-Forster & Paul J. Ferraro & Nicholas Janusch & Christian A. Vossler & Kent D. Messer, 2019. "Behavioral and Experimental Agri-Environmental Research: Methodological Challenges, Literature Gaps, and Recommendations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 719-742, July.
    7. Abel Brodeur, Nikolai M. Cook, Anthony Heyes, 2022. "We Need to Talk about Mechanical Turk: What 22,989 Hypothesis Tests Tell Us about Publication Bias and p-Hacking in Online Experiments," LCERPA Working Papers am0133, Laurier Centre for Economic Research and Policy Analysis.
    8. Bellemare, Charles & Bissonnette, Luc & Kröger, Sabine, 2014. "Statistical Power of Within and Between-Subjects Designs in Economic Experiments," IZA Discussion Papers 8583, Institute of Labor Economics (IZA).
    9. Goulas, Sofoklis & Griselda, Silvia & Megalokonomou, Rigissa, 2023. "Compulsory class attendance versus autonomy," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 935-981.
    10. Cloos, Janis & Greiff, Matthias & Rusch, Hannes, 2020. "Geographical Concentration and Editorial Favoritism within the Field of Laboratory Experimental Economics (RM/19/029-revised-)," Research Memorandum 014, Maastricht University, Graduate School of Business and Economics (GSBE).
    11. Nicolas Vallois & Dorian Jullien, 2017. "Replication in Experimental Economics: A Historical and Quantitative Approach Focused on Public Good Game Experiments," GREDEG Working Papers 2017-21, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    12. Zacharias Maniadis & Fabio Tufano & John A. List, 2017. "To Replicate or Not To Replicate? Exploring Reproducibility in Economics through the Lens of a Model and a Pilot Study," Economic Journal, Royal Economic Society, vol. 127(605), pages 209-235, October.
    13. Cloos, Janis & Greiff, Matthias & Rusch, Hannes, 2021. "Editorial favoritism in the field of laboratory experimental economics (RM/20/014-revised-)," Research Memorandum 005, Maastricht University, Graduate School of Business and Economics (GSBE).
    14. Black, Bernard & Hollingsworth, Alex & Nunes, Letícia & Simon, Kosali, 2022. "Simulated power analyses for observational studies: An application to the Affordable Care Act Medicaid expansion," Journal of Public Economics, Elsevier, vol. 213(C).
    15. Nicolas Vallois & Dorian Jullien, 2017. "Replication in experimental economics: A historical and quantitative approach focused on public good game experiments," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01651080, HAL.
    16. Igor Asanov & Christoph Buehren & Panagiota Zacharodimou, 2020. "The power of experiments: How big is your n?," MAGKS Papers on Economics 202032, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    17. Nicolas Vallois & Dorian Jullien, 2017. "Estimating Rationality in Economics: A History of Statistical Methods in Experimental Economics," GREDEG Working Papers 2017-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    18. Nicolas Vallois & Dorian Jullien, 2018. "A history of statistical methods in experimental economics," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 25(6), pages 1455-1492, November.
    19. Maurizio Canavari & Andreas C. Drichoutis & Jayson L. Lusk & Rodolfo M. Nayga, Jr., 2018. "How to run an experimental auction: A review of recent advances," Working Papers 2018-5, Agricultural University of Athens, Department Of Agricultural Economics.
    20. Strømland, Eirik, 2019. "Preregistration and reproducibility," Journal of Economic Psychology, Elsevier, vol. 75(PA).
    21. Brian Albert Monroe, 2020. "The statistical power of individual-level risk preference estimation," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 6(2), pages 168-188, December.
    22. Nicolas Vallois & Dorian Jullien, 2017. "Estimating Rationality in Economics: A History of Statistical Methods in Experimental Economics," Working Papers halshs-01651070, HAL.

    More about this item

    Keywords

    Null Hypothesis Significance Testing; Type-I-errors; Type-II errors; Significance level; Statistical power;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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