Physio-Economics

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At Physio-Economics is an extension of experimental economics to capture physiological parameters. These include, for example, the skin conductivity , blood pressure and pulse of the subject. These parameters can be used to measure the states of excitement and emotional reactions of the experimental participants and thus gain knowledge about their behavior. In experiments, test subjects are presented with an economic decision-making situation and the physiological parameters are included in the analysis. In this way, behavior patterns can be better explained and new insights into the decision-making behavior of actors in economic game situations can be gained.

background

In economics, the behavior of people in economic decision-making situations has been investigated with the help of laboratory experiments for decades. Such experiments take place in a controlled laboratory environment in which the test subjects usually take part in an abstract game situation with the help of a computer. In traditional experimental economic research, the analysis of the experiments is limited primarily to the evaluation of market results and questionnaires that are completed by the test subjects. However, the questioning of the test persons only provides subjective impressions and, in addition, often leads to the problem of socially desirable answers. By measuring physiological parameters, such as the skin conductance , additional, objective measured values ​​are obtained that allow a deeper insight into the decision-making process.

A basic understanding of the behavior of the participants and their motives is particularly important when examining markets and negotiations. Therefore, the influence of emotions on decisions and behavior is of great interest, as it can be used to better explain why individual decisions were made that may not seem rational at first glance. The necessary methodology for measuring emotions has already been well researched in psychophysiology and is an established means. It therefore makes sense to examine not only actions in game theory experiments, but also physiological parameters of the test subject and thus the test subject's state of health.

Delimitation from related areas

The research area Neuroeconomics examines brain activities in economic decision-making situations with methods of magnetic resonance tomography or electro-encephalography (EEG). However, these technologies can only be used in economic experiments with considerable technical and financial effort. In order to guarantee this applicability and to represent a useful addition to experimental economic research, the following conditions were placed on the measurement methodology:

  1. It should be possible to make observations on several experimental participants in parallel in the vicinity of a normal PC pool
  2. Simple and handy equipment that does not require extensive training or special medical training for implementation and evaluation
  3. Sitting upright and making eye contact should be possible
  4. It should be possible to carry out measurements in a pleasant environment in order to influence the test subject and the results as little as possible
  5. The measurements should not be uncomfortable or have any after-effects and thus offer acceptable conditions for participation.
  6. Reasonable costs for equipment and tests

Physiological parameters that meet these conditions particularly well are electrodermal activity, heart rate and blood pressure. While neuro-economics concentrates on neuronal activities in economic decision-making situations, in the physio-economics research area only physiological parameters are evaluated.

literature

  • Boucsein, Wolfram: Electrodermal Activity. Basics, methods and applications . Springer-Verlag, Berlin 1988, ISBN 3-540-18586-0
  • Cacioppo, John T .; Tassinary, Louis G. and Berntson, Gary G. (Eds.): Handbook of psychophysiology . 3rd ed. Cambridge: Cambridge University Press, 2007. ISBN 978-0-521-84471-0
  • Hagenau, M .; Seifert, S., Weinhardt, C .: A primer on Physio-Economics , Group Decisions and Negotiations, Montreal 2007
  • Kagel, John H. and Roth, Alvin E .: The Handbook of Experimental Economics . Princeton University Press, Princeton 1995, ISBN 0-691-05897-0
  • Lo, A. and Repin, D .: The psychophysiology of realtime financial risk processing , Journal of Cognitive Neuroscience 14 (2002), pp. 323-329
  • Lo, A .; Repin D. and Steenbarger, B .: Fear and Greed in Financial Markets: A Clinical Study of Day-Traders , American Economic Revue 95 (2005), pp. 352-359
  • Smith; Dickhaut: Economics and Emotions: Institutions Matter , Games and Economic Behavior 52 (2005), pp. 316-335
  • Smith, Vernon L: Theory, Experiment and Economics , The Journal of Economic Perspectives, Vol. 3, No. 1, 1989, pp. 151-169