On the External Validity of Economic Rationality

Last registered on December 24, 2021

Pre-Trial

Trial Information

General Information

Title
On the External Validity of Economic Rationality
RCT ID
AEARCTR-0007467
Initial registration date
December 21, 2021

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
December 24, 2021, 4:50 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Primary Investigator

Affiliation

Other Primary Investigator(s)

PI Affiliation
Department of Economics, Singapore National University
PI Affiliation
School of Business, Central South University
PI Affiliation
Department of Economics, School of Economics and Managemen, Tsinghua Universityt,
PI Affiliation
Department of Finance, School of Economics and Managemen, Tsinghua Universityt,

Additional Trial Information

Status
On going
Start date
2021-07-10
End date
2021-12-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We design a survey experiment in China to measure people’s economic rationality in risk preference domain and compare this result from the survey experiment with economic rationality in food domain from the observation data of supermarket scanner data. Our motivation stems from the facts that previous studies about economic rationality are mostly studied in one domain alone and lab or field separately, but direct cross-domain or lab vs. field comparisons have not been attempted to date. Using only one domain to measure people’s economic rationality to rate their decision quality in the life need to take external validity into account and deserve further investigation. Our study will shed light on the little known aspects of equivalence between decision quality outside the laboratory and in lab environment. Firstly, we analyze consumer's decision quality between vegetables and meat from supermarket scanner data in Hunan Province, China, using GARP analysis. Secondly, We will launch a large-scale choice-based conjoint survey experiment in the same sample using a budget line task extended from Choi et al. (2007) and Choi et al. (2014). Thirdly, we will investigate the external validity of economic rationality of economic rationality involved in same participants in supermarket shopping and risk task game.
External Link(s)

Registration Citation

Citation
Chen, Mingshi et al. 2021. "On the External Validity of Economic Rationality ." AEA RCT Registry. December 24. https://doi.org/10.1257/rct.7467
Experimental Details

Interventions

Intervention(s)
We measure economic rationality of individual preferences. As such, we do not have an experimental intervention. Rather, we rely in natural variation on subject's characteristics.
Intervention Start Date
2021-07-10
Intervention End Date
2021-12-31

Primary Outcomes

Primary Outcomes (end points)
The key outcome variables in this experiment are consistency scores measured by the choice data, as indicators of economic rationality in risk preference.
Primary Outcomes (explanation)
Following Choi et al. (2007, 2014) participants make several decisions, each reflecting a different budget line. With these decisions, we can observe violations of GARP (Generalized Axiom of Revealed Preferences) and compute their Critical Cost Effective Index (CCEI), which will be our main measurement of Decision Quality. The CCEI measures the proportion of income that a person wasted by making the choice that violated revealed preference.
We develop the design of Choi et al. (2007, 2014) and A set of 22 decisions is presented to subjects.

Secondary Outcomes

Secondary Outcomes (end points)
Our secondary outcomes include (1) individuals' IQ, (2) big five personality traits and (3) socio-economic and sociodemographic investigation.
Secondary Outcomes (explanation)
(1) IQ test is based on Raven's Progressive Matrices, which consist of visual geometric design with a missing piece. The test taker is given to 7 questions having six to eight choices to pick from and fill in the missing piece;
(2) The Big Five personality traits, also known as the OCEAN model, is a suggested taxonomy, or grouping, for personality traits. The theory identifies five factors: openness to experience; conscientiousness; extraversion; agreeableness; neuroticism. The test taker is given to 10 questions.
(3) Socio-economic and sociodemographic investigation includes income, education, family size, sex, etc.

Experimental Design

Experimental Design
We design an online survey experiment which will take approximately 30 minutes.The subjects are members from Better life Group, one of the biggest supermarket chains in China. The experiment consists of four sections. In Section 1, each participant has to make choices in the risk task. Subjects are asked to allocate a budget between two risky assets, each one of which obtains with a probability of 0.5. The assets have different payoffs, so that allocations give an indication of risk preferences. There are 22 questions in this section. In Section 2, we measure 5 Big personality of subjects. In Section 3, we test subjects' IQ by raven Test. Lastly, we ask participants for their demographic and economic information, including gender, education level and other socio-economic and sociodemographic characteristics.
Experimental Design Details
In Section 1, subjects are asked to allocate a budget between two risky assets, each one of which obtains with a probability of 0.5. The assets have different payoffs, so that allocations give an indication of risk preferences. The sections consists of 22 decision problems with two risky assets having different payoffs. We extend the most common design in studying decisions under risk (e.g. Choi et al., 2014; Carvalho et al., 2016; Kim et al., 2018). The computer randomly chooses one round from the 22 rounds and participant will get rewarded depending on the outcome of this chosen round.
In Section 2, Big Five personality traits test consists of 10 quetions. In every question, subjects must rate on how true they are about themselves on a seven point scale.
In Section 3, Raven' IQ test consists of 7 questions. All the questions on the Raven's progressives consist of visual geometric design with a missing piece. The test taker is given six to eight choices to pick from and fill in the missing piece.
Randomization Method
Subjects were randomly assigned to different versions of survey. The difference of survey is the order of questions in secition1. This randomization was done by the software used to conduct the survey.
Randomization Unit
Different versions of the survey.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
6138 participants
Sample size: planned number of observations
6138 participants
Sample size (or number of clusters) by treatment arms
6138 participants
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials