2019 Fiscal Year Final Research Report

Better foundations for better social institutions - theory and experiments

Research Project

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Project/Area Number	17K03634
Research Category	Grant-in-Aid for Scientific Research (C)
Allocation Type	Multi-year Fund
Section	一般
Research Field	Economic theory
Research Institution	Waseda University
Principal Investigator	Veszteg Robert 早稲田大学, 政治経済学術院, 教授 (30597753)
Co-Investigator(Kenkyū-buntansha)	船木由喜彦早稲田大学, 政治経済学術院, 教授 (50181433)
Project Period (FY)	2017-04-01 – 2020-03-31
Keywords	experiments / matching / bargaining / decentralized markets / unstructured interaction / fairness / stability
Outline of Final Research Achievements	Our studies in the experimental laboratory focus on decentralized and unconstrained human interaction. Our emphasis lies on understanding how people search for a partner (matching problem) and how they split certain joint benefits (bargaining problem). In terms of behavior, we have observed important deviations from what most theoretical models assume. In matching problems, individual myopic rationality (decisions that improve upon the status quo, without being the overall best) dominates on decentralized markets, and centralized solutions (introduced to solve market failures) are typically unable to induce the intended outcomes as only a small fraction of decision-makers act in sophisticated manner and have full understanding of the strategic situation. The behavior that we have observed in unstructured bargaining scenarios also violates some "standard" axioms (e.g., scale invariance, midpoint domination) that widely-used theoretical solution concepts rely on.
Free Research Field	experimental economics
Academic Significance and Societal Importance of the Research Achievements	Our empirical results deliver important feedback to theoreticians on some of the widely-used basic assumptions on human rationality and axioms of fairness. By identifying more realistic assumptions, we contribute to creating better institutions for human interaction.