There are many experiments that have been conducted to study various aspects of behavioral economics such as decision making, preferences, biases, and social influences. Here are three examples of such experiments:
The Dictator Game
The dictator game is a simple game that involves two players, a dictator and a recipient. The dictator is given a sum of money and can decide how much to keep for himself and how much to give to the recipient. The recipient has no choice but to accept whatever the dictator offers. This game tests how altruistic or selfish people are, and how they value fairness and equality. Behavioral economists have found that dictators often give some positive amount to the recipient, even though they could keep everything for themselves. This suggests that people have some intrinsic motivation to be generous or fair, or that they feel guilty or ashamed of being too greedy.
Framing Effect
The framing effect is a phenomenon that occurs when people make different choices depending on how the same information is presented to them. For example, people may be more likely to buy a product if it is advertised as having a 90% success rate than if it is advertised as having a 10% failure rate, even though the probabilities are the same. This effect shows how people are influenced by the wording, context, and emotional appeal of a message, rather than by the objective facts. Behavioral economists have used this effect to study how people perceive risks, benefits, losses, and gains, and how they can be nudged to make better decisions.
Public Goods Game
The public goods game is a game that involves a group of players who can contribute some of their money to a common pool. The money in the pool is then multiplied by a factor and distributed equally among all the players, regardless of how much they contributed. This game tests how cooperative or free-riding people are, and how they respond to social dilemmas. Behavioral economists have found that people often contribute more than the rational prediction, which is to contribute nothing and free-ride on others’ contributions. This suggests that people have some social preferences, such as reciprocity, trust, or reputation, that motivate them to cooperate with others. However, cooperation may also decline over time, or vary depending on the group size, communication, punishment, or reward mechanisms.
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