IDEAS home Printed from https://ideas.repec.org/p/zbw/dicedp/100.html
   My bibliography  Save this paper

Do short-term laboratory experiments provide valid descriptions of long-term economic interactions? A study of Cournot markets

Author

Listed:
  • Normann, Hans-Theo
  • Requate, Till
  • Waichman, Israel

Abstract

One key problem regarding the external validity of laboratory experiments is their duration: while economic interactions out in the field are often lengthy processes, typical lab experiments only last for an hour or two. To address this problem for the case of both symmetric and asymmetric Cournot duopoly, we conduct internet treatments lasting more than a month. Subjects make the same number of decisions as in the short-term counterparts, but they decide once a day. We compare these treatments to corresponding standard laboratory treatments and also to short-term internet treatments lasting one hour. We do not observe differences in behavior between the short- and long-term in the symmetric treatments, and only a small difference in the asymmetric treatments. We overall conclude that behavior is not considerably different between the short- and long-term.

Suggested Citation

  • Normann, Hans-Theo & Requate, Till & Waichman, Israel, 2013. "Do short-term laboratory experiments provide valid descriptions of long-term economic interactions? A study of Cournot markets," DICE Discussion Papers 100, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:100
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/78223/1/75654727X.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. James T. Hong & Charles R. Plott, 1982. "Rate Filing Policies for Inland Water Transportation: An Experimental Approach," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 1-19, Spring.
    2. Till Requate & Israel Waichman, 2011. "“A profit table or a profit calculator?” A note on the design of Cournot oligopoly experiments," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 36-46, March.
    3. James Andreoni & Emily Blanchard, 2006. "Testing subgame perfection apart from fairness in ultimatum games," Experimental Economics, Springer;Economic Science Association, vol. 9(4), pages 307-321, December.
    4. Jörg Oechssler & Andreas Roider & Patrick W. Schmitz, 2015. "Cooling Off in Negotiations: Does it Work?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 171(4), pages 565-588, December.
    5. Jan Potters & Sigrid Suetens, 2009. "Cooperation in Experimental Games of Strategic Complements and Substitutes," Review of Economic Studies, Oxford University Press, vol. 76(3), pages 1125-1147.
    6. Jérôme Hergueux & Nicolas Jacquemet, 2015. "Social preferences in the online laboratory: a randomized experiment," Experimental Economics, Springer;Economic Science Association, vol. 18(2), pages 251-283, June.
    7. Armin Falk & James J. Heckman, 2009. "Lab Experiments are a Major Source of Knowledge in the Social Sciences," Working Papers 200935, Geary Institute, University College Dublin.
    8. Bellemare, Charles & Kroger, Sabine, 2007. "On representative social capital," European Economic Review, Elsevier, vol. 51(1), pages 183-202, January.
    9. Lei, Vivian & Noussair, Charles N & Plott, Charles R, 2001. "Nonspeculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality vs. Actual Irrationality," Econometrica, Econometric Society, vol. 69(4), pages 831-859, July.
    10. John Horton & David Rand & Richard Zeckhauser, 2011. "The online laboratory: conducting experiments in a real labor market," Experimental Economics, Springer;Economic Science Association, vol. 14(3), pages 399-425, September.
    11. Sascha Fullbrunn & Katharina Richwien & Abdolkarim Sadrieh, 2011. "Trust and Trustworthiness in Anonymous Virtual Worlds," Journal of Media Economics, Taylor & Francis Journals, vol. 24(1), pages 48-63.
    12. Katrin Schmelz & Anthony Ziegelmeyer, 2015. "Social Distance and Control Aversion: Evidence from the Internet and the Laboratory," TWI Research Paper Series 100, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    13. Anderhub, Vital & Muller, Rudolf & Schmidt, Carsten, 2001. "Design and evaluation of an economic experiment via the Internet," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 227-247, October.
    14. Chesney, Thomas & Chuah, Swee-Hoon & Hoffmann, Robert, 2009. "Virtual world experimentation: An exploratory study," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 618-635, October.
    15. Cassar, Alessandra, 2007. "Coordination and cooperation in local, random and small world networks: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 58(2), pages 209-230, February.
    16. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 1999. "Learning in Cournot Oligopoly--An Experiment," Economic Journal, Royal Economic Society, vol. 109(454), pages 80-95, March.
    17. Charness, Gary & Haruvy, Ernan & Sonsino, Doron, 2007. "Social distance and reciprocity: An Internet experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 88-103, May.
    18. Charles F. Mason & Owen R. Phillips, 1997. "Information And Cost Asymmetry In Experimental Duopoly Markets," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 290-299, May.
    19. Mason, Charles F & Phillips, Owen R & Nowell, Clifford, 1992. "Duopoly Behavior in Asymmetric Markets: An Experimental Evaluation," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 662-670, November.
    20. Fiedler, Marina & Haruvy, Ernan, 2009. "The lab versus the virtual lab and virtual field--An experimental investigation of trust games with communication," Journal of Economic Behavior & Organization, Elsevier, vol. 72(2), pages 716-724, November.
    21. Hans-Theo Normann & Brian Wallace, 2012. "The impact of the termination rule on cooperation in a prisoner’s dilemma experiment," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(3), pages 707-718, August.
    22. Müller, R.J., 2001. "Auctions : the big winner among trading mechanisms for the Internet economy," Research Memorandum 016, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    23. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
    24. Isaac, R. Mark & Walker, James M. & Williams, Arlington W., 1994. "Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups," Journal of Public Economics, Elsevier, vol. 54(1), pages 1-36, May.
    25. Uri Gneezy & John A List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," Econometrica, Econometric Society, vol. 74(5), pages 1365-1384, September.
    26. repec:hal:journl:halshs-00748615 is not listed on IDEAS
    27. Antoni Bosch-DomËnech & Nicolaas J. Vriend, 2003. "Imitation of successful behaviour in cournot markets," Economic Journal, Royal Economic Society, vol. 113(487), pages 495-524, April.
    28. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    29. Daniel Friedman & Ryan Oprea, 2012. "A Continuous Dilemma," American Economic Review, American Economic Association, vol. 102(1), pages 337-363, February.
    30. George Loewenstein, 2000. "Emotions in Economic Theory and Economic Behavior," American Economic Review, American Economic Association, vol. 90(2), pages 426-432, May.
    31. Kyung Hwan Baik & Todd Cherry & Stephan Kroll & Jason Shogren, 1999. "Endogenous Timing in a Gaming Tournament," Theory and Decision, Springer, vol. 47(1), pages 1-21, August.
    32. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
    33. Nick Feltovich, 2003. "Nonparametric Tests of Differences in Medians: Comparison of the Wilcoxon–Mann–Whitney and Robust Rank-Order Tests," Experimental Economics, Springer;Economic Science Association, vol. 6(3), pages 273-297, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Katrin Schmelz & Anthony Ziegelmeyer, 2015. "Social Distance and Control Aversion: Evidence from the Internet and the Laboratory," TWI Research Paper Series 100, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    2. Fischer, Christian & Normann, Hans-Theo, 2018. "Collusion and bargaining in asymmetric cournot duopoly: An experiment," DICE Discussion Papers 283, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Thomas, Tyler F., 2016. "Motivating revisions of management accounting systems: An examination of organizational goals and accounting feedback," Accounting, Organizations and Society, Elsevier, vol. 53(C), pages 1-16.
    4. Messinger, Paul R., 2016. "The role of fairness in competitive supply chain relationships: An experimental studyAuthor-Name: Choi, Sungchul," European Journal of Operational Research, Elsevier, vol. 251(3), pages 798-813.

    More about this item

    Keywords

    internet experiment; Cournot oligopoly; long-term interactions; methodology; internet vs. laboratory experiment;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:dicedp:100. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/diduede.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.