What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?

E conomists have increasingly turned to the experimental model of the physical sciences as a method to understand human behavior. Peerreviewed articles using the methodology of experimental economics were almost nonexistent until the mid-1960s and surpassed 50 annually for the first time in 1982; and by 1998, the number of experimental papers published per year exceeded 200 (Holt, 2006). Lab experiments allow the investigator to influence the set of prices, budget sets, information sets, and actions available to actors, and thus measure the impact of these factors on behavior within the context of the laboratory. The allure of the laboratory experimental method in economics is that, in principle, it provides ceteris paribus observations of individual economic agents, which are otherwise difficult to obtain. A critical assumption underlying the interpretation of data from many laboratory experiments is that the insights gained in the lab can be extrapolated to the world beyond, a principle we denote as generalizability. For physical laws and processes like gravity, photosynthesis, and mitosis, the evidence supports the idea that what happens in the lab is equally valid in the broader world. The American astronomer Harlow Shapley (1964, p. 43), for instance, noted that “as far as we can tell, the same physical laws prevail everywhere.” In this manner, astronomers are able to infer the quantity of certain gases in the Sunflower galaxy, for example, from observations of signature wavelengths of light emitted from that galaxy.