Stephen Kinsella (UL) discusses computable and experimental economics at the University of Limerick. He defines computable economics as using computers to analyze economic models and experimental economics as using controlled experiments to test economic theories. He describes plans to open the iCEEL laboratory in January 2009, which will include 20 computers and a mobile lab to conduct experiments on topics like trust and risky investments. The laboratory aims to facilitate collaboration between researchers.

1. Computable and Experimental Economics at the
University of Limerick
Stephen Kinsella
Dept. Economics,
University of Limerick.
stephen.kinsella@ul.ie
www.stephenkinsella.net
November 5, 2008
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 1 / 14

2. Today
1 Computable Economics
2 Experimental Economics
3 iCEEL
4 An Experiment
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 2 / 14

3. By way of a preamble. . .
But I believe that there is no philosophical highroad in science,
with epistemological signposts. . . we are in a jungle and find our
way out by trial and error, building our road behind us as we
proceed. We do not find signposts at crossroads, but our scouts
erect them, to help the rest.
––Max Born, Experiment and Theory in Physics (1943)
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 3 / 14

4. What is Computable Economics?
we, as economic theorists, tend to ‘formulate the
questions’ in the language of a mathematics that the
digital computer does not understand—classical real
analysis—but ‘get together the data’ that it does,
because the natural form in which economic data
appear is in terms of integer, natural or rational
numbers. The transition between the two domains
remains a proverbial black box. . .
–(3, pg. 4)
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 4 / 14

5. An Example
Intermediate Value Theorem
Theorem (Intermediate Value Theorem)
Let f : R −→ R be a continuous function from the closed interval [a, b] to
R and let f (a) < 0 and f (b) > 0. Then ∃x ∈ R and a < x < b such that
f (x) = 0.
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 5 / 14

6. Figure: Example of a fixed point. Intermediate Value Theorem underpins fixed
point theorems, which underpin general equilbrium theory.
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 6 / 14

7. An Example
Constructive Intermediate Value Theorem
Theorem (Constructive Intermediate Value Theorem)
Let f : R −→ R be a continuous function, from [a, b] ∈ R to R, and let
f (a) < 0, f (b) > 0; then ∀ > 0, ∃x ∈ R such that a < x < b subject to
|f (x)| < .
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 7 / 14

8. So What?
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 8 / 14

9. Definitions & Pioneers
Defined as the use of experimental methods to evaluate theoretical
predictions of economic behaviour (1).
Uses controlled, scientifically designed experiments to test economic
theories under laboratory conditions.
Pioneered by Smith (1962), Kahenman & Tversky (1979)
Modern variants: Behavioural game theory, neuroeconomics, field
experiments, computable experimental economics
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

10. Definitions & Pioneers
Defined as the use of experimental methods to evaluate theoretical
predictions of economic behaviour (1).
Uses controlled, scientifically designed experiments to test economic
theories under laboratory conditions.
Pioneered by Smith (1962), Kahenman & Tversky (1979)
Modern variants: Behavioural game theory, neuroeconomics, field
experiments, computable experimental economics
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

11. Definitions & Pioneers
Defined as the use of experimental methods to evaluate theoretical
predictions of economic behaviour (1).
Uses controlled, scientifically designed experiments to test economic
theories under laboratory conditions.
Pioneered by Smith (1962), Kahenman & Tversky (1979)
Modern variants: Behavioural game theory, neuroeconomics, field
experiments, computable experimental economics
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

12. Definitions & Pioneers
Defined as the use of experimental methods to evaluate theoretical
predictions of economic behaviour (1).
Uses controlled, scientifically designed experiments to test economic
theories under laboratory conditions.
Pioneered by Smith (1962), Kahenman & Tversky (1979)
Modern variants: Behavioural game theory, neuroeconomics, field
experiments, computable experimental economics
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 9 / 14

13. Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 10 / 14

14. iCEEL
New Lab, New KBS
20 Computers, proper partitions, servers, software, etc
Mobile Lab (20 Laptops)
Trading Simulation Floor
Jan 2009
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

15. iCEEL
New Lab, New KBS
20 Computers, proper partitions, servers, software, etc
Mobile Lab (20 Laptops)
Trading Simulation Floor
Jan 2009
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

16. iCEEL
New Lab, New KBS
20 Computers, proper partitions, servers, software, etc
Mobile Lab (20 Laptops)
Trading Simulation Floor
Jan 2009
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

17. iCEEL
New Lab, New KBS
20 Computers, proper partitions, servers, software, etc
Mobile Lab (20 Laptops)
Trading Simulation Floor
Jan 2009
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

18. iCEEL
New Lab, New KBS
20 Computers, proper partitions, servers, software, etc
Mobile Lab (20 Laptops)
Trading Simulation Floor
Jan 2009
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 11 / 14

19. Social aspects of risky investments
4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment
We alter access to trustees, & change participant’s information levels
with regard to the trustworthiness of these trustees
We think as we increase information about principal to agent, trust,
and risky behaviour alters (author?) (2)
Obvious real world applications
Extra dimension: culture
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

20. Social aspects of risky investments
4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment
We alter access to trustees, & change participant’s information levels
with regard to the trustworthiness of these trustees
We think as we increase information about principal to agent, trust,
and risky behaviour alters (author?) (2)
Obvious real world applications
Extra dimension: culture
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

21. Social aspects of risky investments
4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment
We alter access to trustees, & change participant’s information levels
with regard to the trustworthiness of these trustees
We think as we increase information about principal to agent, trust,
and risky behaviour alters (author?) (2)
Obvious real world applications
Extra dimension: culture
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

22. Social aspects of risky investments
4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment
We alter access to trustees, & change participant’s information levels
with regard to the trustworthiness of these trustees
We think as we increase information about principal to agent, trust,
and risky behaviour alters (author?) (2)
Obvious real world applications
Extra dimension: culture
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

23. Social aspects of risky investments
4 ‘trustees’, 1 ‘trustor’ interact in an experimental environment
We alter access to trustees, & change participant’s information levels
with regard to the trustworthiness of these trustees
We think as we increase information about principal to agent, trust,
and risky behaviour alters (author?) (2)
Obvious real world applications
Extra dimension: culture
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 12 / 14

24. Collaboration!
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 13 / 14

25. References
[1] John H. Kagel and Alvin E. Roth. Handbook of Experimental
Economics. Princeton University Press, New Jersey, USA, 1997.
[2] A. R. Soetevent. Empirics of the identification of social interactions:
An evaluation of the approaches and their results. Journal of Economic
Surveys, 20(2):193–228, 2006.
[3] K. V. Velupillai. Computability, Complexity and Constructivity in
Economic Analysis. Blackwell Publishing, 2005.
Stephen Kinsella (UL) Computable and Experimental Economics November 5, 2008 14 / 14