VIRTUAL EXPERIMENTS IN ECONOMICS A METHODOLOGICAL ASSESSMENT
Alessandro Innocenti(University of Siena)
To propose Low immersive virtual experiments (LIVE) as
tools for experimental economics where the laboratory
approach has important limitations.
To explore the potentiality of LIVE by providing the
preliminary findings of two specifically designed
experimental studies investigating risk propension under
social exposure and risk perception in workplaces.
Paper’s purpose
Failures of Lab Experiments
The Context-Free Bias
Virtual Experiments
The ALBO Project
Results
Conclusions
Talk Outline
a) situations are not really presented, but only
described through language
b) choices and decisions are only to be evoked, not to
be really performed
c) there is a lack in the normal cascade of events as
actions and reactions
d) temporal frame is generally compressed
e) irrelevance of the context
Failures of Lab Experiments
Many experimental economists seem to view their
enterprise as akin to silicon chip production. Subjects are
removed from all familiar contextual cues. Like the
characters 'thing one' and 'thing two' in Dr. Suess' Cat in
the Hat, buyers and sellers become 'persons A and B', and
all other information that might make the situation familiar
and provide a clue about how to behave is removed.
George Loewenstein (1999)
Lab as silicon chip production
The context-free experiment is an elusive goal
A major tenet of cognitive psychology is how all forms of
thinking and problem solving are context-dependent
The laboratory is not a socially neutral context, but is itself
an institution with its own formal or informal, explicit or
tacit, rules
Games in the laboratory are usually played without labels
but subjects inevitably apply their own labels
The context-free bias
Labels can increase experiment’s external validity with a
minimal sacrifice of internal validity
In particular, to test learning and cognitive models, it is
necessary to remind and to evoke contexts which may
activate emotions, association, similarities in the
laboratory
Labels can make subjects more or less rational in
relation to the evoked context
The power of labels
Jones-Sugden Theory and Decision (2001)
Positive confirmation bias: tendency, when testing an existing belief, to search for evidence which could confirm that belief, rather than disconfirming it
The original selection Wason’s task was formulated in highly abstract terms
Correct response was facilitated by adding thematic content to the task, i.e. a cover story which accounts for the statement and gives some point to the task
Labels make subjects more rational
Innocenti-Pazienza-Lattarulo Transport Policy (2013)
Main finding: Subjects’ inclination to prefer cars over bus and metro tends to override the incentives’ effect
Laboratory behavior depends more on prior learning outside the laboratory than on gains in the laboratory
In the experiment, it is as if subjects take into the lab the preferences applied to real choices between car, bus and metro and stick to them with high probability
Labels give subjects clues to become less and not more rational
Labels make subjects less rational
The use of presentations with virtual reality (VR) simulations can convey objectively this kind of context
“A Virtual Experiment is an experiment set in a controlled lab-like environment, using typical lab or field participants, that generates synthetic field cues using Virtual Reality (VR) technology.” Fiore, Harrison, Hughes and Rutström (2009) FHHR (p. 66)
Virtual experiments are not defined as just those occurring over the web (Virtual Worlds experiments as a subset of Virtual Experiments)
Virtual Experiments (VE)
Virtual Experiment combines insights from virtual reality (VR) simulations in computer science, decision making and ecological rationality from psychology, and experiments from economics
The methodological objective of Virtual Experiments is to combine the strengths of the artificial controls of lab experiments with the naturalistic domain of field experiments
Virtual Experiments (VE)
High Immersive Virtual Experiments (HIVE) utilize specialized displays such as CAVE, head-mounted displays or augmented reality, which perceptually surround subjects. The individual perceives himself to be enveloped by, included in, and interacting with an environment providing a continuous stream of stimuli
Desktop or Low Immersive Virtual Experiments (LIVE) use computer screen based applications of virtual reality, such as “ad hoc” virtual simulations or virtual worlds (Second Life) to provide a weaker sense of presence.
High and Low Immersive VE
Bateman et al. 2009In the majority of choice experiments on gain-loss asymmetry (WTA>WTP) the attributes of non-market goods are conveyed to respondents as a table of numeric and/or categorical data.
Compared to the standard presentation, preferences elicited in the Virtual Experiment are less variable and exhibit a significant reduction in asymmetry between willingness to pay for gains and willingness to accept for corresponding losses.
Applications – Gain/Loss Asymmetry
Fiore et al. (2009)Virtual Experiment to elicit risk perception from wild fires and the opportunity cost of public funds allocated to prescribed burns
Subjects experience four dynamic visual simulations of specific wild fires, with varying weather and fuel conditions. Simulations are selected to represent high and low risk of fire damage
Participants experience a sense of presence, a psychological state of “being there and take decisions closer to real behavior” (with cognitive constraints )
Applications – Risk Perception
Main objectives
To demonstrate that the standard tools for detecting work-related factors of risk and stress (questionnaires and interviews) are inadequate to capture workers’ real perception
To prove that virtual and low immersive simulations of work environments provide a better awareness of psycho-social risks in workplaces
ALBO Project
Experiment 1Individual risk attitude under social exposure in the lab is modified by the presence of a virtual coach
Experiment 2Workers’ awareness of biases in risk perception is enhanced by virtual simulations of their work activities
ALBO Research Findings
Yechiam et al. “Observing others’ behavior and risk taking in decisions from experience”, JDM 2008
choice between safe and risky option two tasks: rare-loss and equiprobable-loss exposure vs. no-exposure condition observer vs. source role
Main finding: Observing others’ choices increases observer’s risk propensity
Experiment 1 - Background
Between-subject
52 undergraduate students (avg 22 y.)
Two subjects randomly and anonymously paired
playing as source and observer
30 repeated choices (alternate):
15 rare (equiprobable) gains
15 rare (equiprobale) losses
Comparison between source and observer condition
Experiment 1 - Design
Experiment 1 - Tasks
Table 1 Experimental design
Rare Gain-Loss Condition Equiprobable Gain-Loss Condition
Problem 1.
Rare
Gain
Problem 2.
Rare
Loss
Problem 3.
Equiprobable
Gain
Problem 4.
Equiprobable
Loss
Safe
option
(S)
Gain 2 tokens
(EV = 2)
Lose 2 tokens
(EV = -2)
Gain 2 tokens
(EV = 2)
Lose 2 tokens
(EV = -2)
Risky
option
(R)
Gain 30 tokens
(prob. 5%)
or
Gain 1 token
(prob. 95%)
(EV = 2.5)
Lose 30 tokens
(prob. 5%)
or
Lose 1 token
(prob. 95%)
(EV = -2.5)
Gain 4 tokens
(prob. 50%)
or
Gain 1 token
(prob. 50%)
(EV = 2.45)
Lose 4 tokens
(prob. 50%)
Or
Lose 1 token
(prob. 50%)
(EV = -2.45)
Observers are more risk-lovers than sources also
for gains (as for losses in Yechiam et al. 2008)
Both roles are risk averse for losses and risk loving
for gains
No significant difference between rare/equiprobable
condition (differently from Yechiam)
Faster reaction time for sources
Personality traits (Big Five Questionnaire) matters
Experiment 1 – Main Findings
LIVExp 1 – Results
No significant differences in risk attitudes between
observers and sources
Both roles are confirmed as risk averse for losses
and risk loving for gains
No difference in reaction time across roles
Virtual environments are perceived as an intermediate
safe environment and allow structuring therapy like a
special and protected environment (Botella et al. 2008)
The Proteus Effect: deindividuation occurs in online
environments because users may adhere to identities
inferred from their avatars (McKenna & Bargh 2000,
Yee-Bailenson 2007)
Deindividuation can also lead to both prosocial and
antisocial behavior (Zimbardo 1969, Gergen et al. 1973).
LIVE Exp 1 – Interpretation
Differences between observers and sources are removed because the virtual coach make subjects’ choices less influenced by laboratory cues
The potentially worrisome desire to please the experimenter is attenuated because no embodiment of the experimental team appears in the lab
Virtual environment enables experimenter to focus subjects on experimental tasks
By allowing participants to take on natural roles in economic settings, virtual worlds can help subjects to focus on the laboratory task
LIVE Exp 1 – Interpretation
Virtual Movies vs. Real Movies in the Assessment of Work Related Stress
Obj.: to verify the presence of differences in the physiological and cognitive activations while subjects watch real movies vs. virtual movies
Hp.: Vision of virtual movies is associated with a lower physiological activation, a more detailed narrative and a greater detection of ‘errors’, thanks to a more objective perspective.
LIVExperiment 2
Between-subject 20 postgraduate students + 16 professional workers 2 Conditions: Real clip of a job stress situation + Virtual simulation of the same clipsDetection of three physiological indices:
Heart rate Electromyography (EMG), measures the electrical
impulses of face muscles at rest and during contraction
Skin Conductance LevelQuestionnaire Generalized Self-Efficacy and Locus of Control (beliefs about control of events)
LIVExperiment 2 - Design
Physiological activations (HR and EMG) are
significantly lower under virtual simulations
Limitations: Small sample and the use of pilot
movies
Research Implications: Results obtained through
the use of virtual reality tools allow to design stress
assessment interventions and online training
courses with virtual coaches
LIVExp 2 – Preliminary Findings
To test if subjects’ behaviour in VE conforms to results generated in conventional experimentation
“Virtual experiments might be more convenient than lab experiments if he sees people behave in he same way in real-world and virtual experiments” (List 2007)
“Determining where virtual world behavior mimics real world behavior is quite important for methodological reasons. If virtual world behavior can be treated as a model of human behavior in general, this would allow a fresh approach to empirical social science” (Castronova 2008)
Main Approach to VE
More naturalistic and less simple settings than
laboratory
Cheaper to maintain virtual laboratory facilities
Easier to control decision tasks and enviroments
No involuntary non-verbal communication
Wider and unbiased population
Virtual Experiments - PROS
Virtual situations project a game-like atmosphere
Proteus effect / deindividuation (may be an asset)
it is difficult to establish subject trust in computer
software
(virtual worlds experiments) subjects’ identity is not
checked because physical presence is lacking
Virtual Experiments - CONS
The difference between virtual and laboratory experiments and between virtual and real behavior is an asset rather than a problem for experimental economics.
It can very helpful in solving some failures of lab experiments
Ir/relevance of the context Intertemporal choice – longtime experiments Heterogeneous subject pools Cross-cultural and professional comparisons
Conclusions
Induced-value theory: use of a reward medium allows to induce pre-specified characteristics in experimental subjects and to make subjects’ innate characteristics largely irrelevant (Smith 1992)
The central aspect of the VX methodology is a VR environment that makes participants experience a sense of presence, a psychological state of ‘‘being there.’’ This sense depends on the degree of involvement that participants experience as a consequence of focusing attention on the set of stimuli and activities generated by the VR simulation.
(Fiore et al. 2009)
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