Thinking and Deciding

44 THE STUDY OF THINKING
that appropriate education, in which certain methods of reasoning are explicitly emphasized,
can have general effects on the tendency to use these methods in everyday
problems unrelated to the areas in which the methods were taught. They also indicate
that some of these effects can be specific to certain methods.
Training studies are not perfect either. Some aspect of the training may be effective,
other than the aspect intended. Really both correlational and experimental
(training) studies are useful, and to some extent they make up for each others’ flaws.
Experimental economics
Much of the research described in this book is closely related to research in economics.
Economists develop normative models, and some of those models are the
same as those considered here. Traditionally, economists have assumed that people
follow normative models, or, at least, that those who use economic theory would
do well to assume that people are rational. (If you assume that people are irrational,
rational people may find a way to take advantage of your assumptions.) Some
economists, however, have tried to test economic theory in the laboratory, using
methods much like those of psychology. They are called experimental economists.
(See Kagel and Roth, 1995, for an overview.)
In this book, I make no distinction between the work of experimental economists
and the work of other researchers. Economic experiments are relevant to many issues
discussed here. But the work does have a kind of characteristic approach. First,
economists tend to be suspicious of verbal reports or judgments that have no consequences
for the subjects. They tend to look at choices, and they provide real consequences
to subjects in the form of payoffs, typically money.
More importantly, experimental economics derives its hypotheses from economic
theory, and it assumes that this theory is meant to be universally descriptive of human
behavior. The theory should therefore apply in the laboratory as well as in real
markets. This is an ambitious assumption, but one that is worthy of our attention.
If economic theory is universally true in this way, it could help explain other social
phenomena, such as politics, crime, and sexual behavior. It is thus important to find
out how the simplest assumptions of economic theory must be modified in the light
of human psychology.
Another characteristic of much work in experimental economics is that it often
assumes that the simplest normative model is one in which people pursue their selfinterest
rationally. This self-interest assumption is not a necessary part of economic
theory, just a simple model that is often useful. The result is that economists are just
as interested in what they call “other-regarding preferences” as they are in biases. For
example, if you give $5 anonymously to another subject in an experiment because, by
chance, you got $10 and she got nothing, you are sacrificing self-interest for fairness.
Again, this is not a “bias,” but it does contradict the simple model that people pursue
rational self-interest only.