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Jasmina Arifovic

This article describes an experiment in a Kydland/Prescott type of environment with cheap talk. Individual evolutionary learning (IEL) acts as a policy maker that makes…

Abstract

This article describes an experiment in a Kydland/Prescott type of environment with cheap talk. Individual evolutionary learning (IEL) acts as a policy maker that makes inflation announcements and decides on actual inflation rates. IEL evolves a set of strategies based on the evaluation of their counterfactual payoffs measured in terms of disutility of inflation and unemployment. Two types of private agents make inflation forecasts. Type 1 agents are automated and they set their forecast equal to the announced inflation rate. Type 2 agents are human subjects who submit their inflation forecast and are rewarded based on their forecast error. The fraction of each type evolves over time based on their performance. Experimental economies result in outcomes that are better than the Nash equilibrium. This article is the first to use an automated policy maker that changes and adapts its rules over time in response to the environment in which human subjects make choices.

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Experiments in Macroeconomics
Type: Book
ISBN: 978-1-78441-195-4

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Tiziana Assenza, Te Bao, Cars Hommes and Domenico Massaro

Expectations play a crucial role in finance, macroeconomics, monetary economics, and fiscal policy. In the last decade a rapidly increasing number of laboratory experiments

Abstract

Expectations play a crucial role in finance, macroeconomics, monetary economics, and fiscal policy. In the last decade a rapidly increasing number of laboratory experiments have been performed to study individual expectation formation, the interactions of individual forecasting rules, and the aggregate macro behavior they co-create. The aim of this article is to provide a comprehensive literature survey on laboratory experiments on expectations in macroeconomics and finance. In particular, we discuss the extent to which expectations are rational or may be described by simple forecasting heuristics, at the individual as well as the aggregate level.

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Experiments in Macroeconomics
Type: Book
ISBN: 978-1-78441-195-4

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Article

Santiago Arango, Erik R. Larsen and Ann van Ackere

The purpose of this paper is to consider queuing systems where captive repeat customers select a service facility each period. Are people in such a distributed system, with

Abstract

Purpose

The purpose of this paper is to consider queuing systems where captive repeat customers select a service facility each period. Are people in such a distributed system, with limited information diffusion, able to approach optimal system performance? How are queues formed? How do people decide which queue to join based on past experience? The authors explore these questions, investigating the effect of information availability, as well as the effect of heterogeneous facility sizes, at the macro (system) and micro (individual performance) levels.

Design/methodology/approach

Experimental economics, using a queuing experiment.

Findings

The authors find little behavioural difference at the aggregate level, but observe significant variations at the individual level. This leads the authors to the conclusion that it is not sufficient to evaluate system performance by observing average customer allocation and sojourn times at the different facilities; one also needs to consider the individuals’ performance to understand how well the chosen design works. The authors also observe that better information diffusion does not necessarily improve system performance.

Practical/implications

Evaluating system performance based on aggregate behaviour can be misleading; however, this is how many systems are evaluated in practice, when only aggregate performance measures are available. This can lead to suboptimal system designs.

Originality/value

There has been little theoretical or empirical work on queuing systems with captive repeat customers. This study contributes to the understanding of decision making in such systems, using laboratory experiments based on the cellular automata approach, but with all agents replaced by humans.

Details

Management Decision, vol. 54 no. 2
Type: Research Article
ISSN: 0025-1747

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Article

David Willer, Lisa Rutström, Linda B. Karr, Mamadi Corra and Dudley Girard

Reports on a project to create a new infrastructure for experimental economics and sociology by connecting cutting edge research to Web‐based software development. The…

Abstract

Reports on a project to create a new infrastructure for experimental economics and sociology by connecting cutting edge research to Web‐based software development. The project will build and maintain an active Web site of highly flexible modular architecture for theoretically‐driven experimentation. The Web site, itself a laboratory, fundamentally advances experimental study, automatically records and archives data, and maintains electronic journals. To increase the integrity and effectiveness of social science knowledge acquisition, the Web site will support replications while creating large and systematic databases. The Web‐lab’s goal is to change social science investigation by allowing experiments to be run using subjects from large and diverse populations. The Web‐lab will democratize experimental research; a local laboratory will need no more than a few computers with access to the Web. Using designs at the Web‐lab, extensive laboratory components will be developed for mainstream graduate and undergraduate social science courses.

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Journal of Knowledge Management, vol. 3 no. 4
Type: Research Article
ISSN: 1367-3270

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Article

Travis Tokar, John A. Aloysius, Matthew A. Waller and Brent D. Williams

Communication between supply chain partners is critical for replenishment decision making. Decision support systems still require significant human decision making with

Abstract

Purpose

Communication between supply chain partners is critical for replenishment decision making. Decision support systems still require significant human decision making with regard to replenishment when promotions are involved. The purpose of this paper is to study the impact of the sharing of information about the magnitude and timing of retail promotions on cost efficiency in the supply chain. The authors compare performance against theoretical benchmarks and draw conclusions significant to managers.

Design/methodology/approach

The subjects in Study 1, 30 undergraduate students at a large, US university, completed the experiment in a single session lasting approximately 60 minutes. The experiment involved a simple, multi‐period replenishment task, played as individuals, that was somewhat like the newsvendor game. Subjects in the experiment employed in Study 2 were senior‐level members of multiple departments from a large consumer products manufacturer in the USA. Participating departments included sales, operations, and supply chain. Self‐reported questionnaires revealed that the average subject had 15 years of experience with supply chain issues and seven years of experience with replenishment. The study was conducted in a single session, lasting approximately two hours, at the corporate headquarters of the participating company. In this experiment, 76 unique subjects participated.

Findings

Results from the single‐echelon study reveal the cost‐reducing effect of knowing the magnitude and timing of demand generated by a promotion. However, the poor performance, compared with the theoretical benchmarks, by respondents in the multi‐echelon study, even when the lead time per node is half that of the single‐echelon case and the subjects were experienced managers, highlights the complexity of the task that results from a lack of coordination.

Practical implications

Billions of dollars are spent on retail promotions each year. The management of the forecasting and replenishment of inventory for such promotions is difficult to automate and requires significant human decision making. The paper explores some key issues that are important in the replenishment decision‐making scenario when a promotion is involved.

Originality/value

Although the most obvious managerial recommendation for reducing the coordination and planning problems associated with promotions is simply to communicate more, the authors' research also suggests it may not be enough to alter performance. The results suggest that while communication is helpful, coordination may represent a more serious challenge.

Details

The International Journal of Logistics Management, vol. 22 no. 1
Type: Research Article
ISSN: 0957-4093

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Article

Travis Tokar

This paper aims to advocate and facilitate undertaking research focused on the effects of human behaviour, judgment and decision making in logistics and supply chain…

Abstract

Purpose

This paper aims to advocate and facilitate undertaking research focused on the effects of human behaviour, judgment and decision making in logistics and supply chain management (SCM).

Design/methodology/approach

In addition to providing an overview of the potential benefits of behavioural research, this paper presents two modified frameworks for identifying and addressing behavioural issues in logistics and SCM.

Findings

Behavioural research can significantly advance both theory and practice in logistics and SCM. Little behavioural research appears in top logistics journals. As researchers begin to conduct more such projects, knowledge pertaining to issues of importance to logistics and SCM will be created.

Originality/value

This paper highlights an important research area and a methodology, (controlled behavioural experiments), that are currently underutilized in logistics and SCM. It further presents potential research questions and suggestions for ways in which interested researchers could begin to address such issues.

Details

The International Journal of Logistics Management, vol. 21 no. 1
Type: Research Article
ISSN: 0957-4093

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Book part

Robert L. Axtell

Certain elements of Hayek’s work are prominent precursors to the modern field of complex adaptive systems, including his ideas on spontaneous order, his focus on market…

Abstract

Certain elements of Hayek’s work are prominent precursors to the modern field of complex adaptive systems, including his ideas on spontaneous order, his focus on market processes, his contrast between designing and gardening, and his own framing of complex systems. Conceptually, he was well ahead of his time, prescient in his formulation of novel ways to think about economies and societies. Technically, the fact that he did not mathematically formalize most of the notions he developed makes his insights hard to incorporate unambiguously into models. However, because so much of his work is divorced from the simplistic models proffered by early mathematical economics, it stands as fertile ground for complex systems researchers today. I suggest that Austrian economists can create a progressive research program by building models of these Hayekian ideas, and thereby gain traction within the economics profession. Instead of mathematical models the suite of techniques and tools known as agent-based computing seems particularly well-suited to addressing traditional Austrian topics like money, business cycles, coordination, market processes, and so on, while staying faithful to the methodological individualism and bottom-up perspective that underpin the entire school of thought.

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Revisiting Hayek’s Political Economy
Type: Book
ISBN: 978-1-78560-988-6

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Article

Michael Lenza

Argues that Humphrey’s tearoom trade study, misinforms readers as much as it informs, regarding moral and ethical foundations for research with human subjects. States that…

Abstract

Argues that Humphrey’s tearoom trade study, misinforms readers as much as it informs, regarding moral and ethical foundations for research with human subjects. States that Humphrey’s tearoom study made significant positive contributions to the population he studied. Concludes that few studies in sociology have accomplished as much in a single work.

Details

International Journal of Sociology and Social Policy, vol. 24 no. 3/4/5
Type: Research Article
ISSN: 0144-333X

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Abstract

Details

Economic Complexity
Type: Book
ISBN: 978-0-44451-433-2

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Article

Ruben Huertas‐Garcia, Agusti Casas‐Romeo and Esther Subira

Internet is set to be one of the main channels of distribution in the future and already greatly facilitates product evaluation thanks to the information available on the…

Abstract

Purpose

Internet is set to be one of the main channels of distribution in the future and already greatly facilitates product evaluation thanks to the information available on the net. The main advantages of electronic shopping over other channels include the reduced costs of searching for products and for product‐related information. Research has stressed the importance of quality information in web site design. The perceived utility of a web site depends on the perceived utility of its content (i.e. quality of information on product characteristics) and its presentation of that content. This paper compares the ways in which a web site's content and content presentation affect the product choice of two consumer groups from different cultures. The paper aims to discuss these issues.

Design/methodology/approach

The authors conduct an exploratory study to determine the key factors which may be used in a later conclusive research. The authors propose a tool based on the statistical design of experiments to determine the number of significant factors used by two market segments (Spanish and US students) when selecting a bottle of wine sold via a web site.

Findings

The authors identify key extrinsic factors of consumers' perceived utility when selecting a bottle of wine from a web site and analyse whether cross‐cultural aspects are significant in this choice. The authors assume that web site evaluations made by users from different geographical areas reflect their preferences for more familiar designs.

Research limitations/implications

The sample size does not enable us to determine the significance of certain variables. Moreover, the sample is not fully representative of the overall consumer population, and so inferences cannot be made about all consumers. However, since the study is exploratory with a theoretical content, the results can be considered valid.

Practical implications

Web page designers need to take into account the cultural characteristics of their target market in the presentation and content of their sites.

Originality/value

The internet marketing literature considers cultural differences in web design as a tool to improve user confidence and attitude. However, few studies have examined the effects of the cultural adaptation of web sites on user evaluations. Here, the authors propose a straightforward procedure for calculating the main effects of web site attributes. Yates' algorithm and the normal probability plot, proposed by Daniel, can be implemented in any spread sheet.

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