Posted by: TomA | 4 June 2008

Dissertation: Time or Leadership?

It is coming to that point where I finally need to commit to one of two potential areas for my dissertation.

The first option is concerning decisions across time. The majority of research into violations of expected utility theory (the foundations of neoclassical economics) has been into risky choice, with a far less vigorous research program into non standard discounting models (though there is still a vast amount of literature on the subject). One particular branch of this research that has caught my eye recently concerns the conflicts in choice over time when picking relative vices and virtues. Essentially, when making a decision over an immediate consumption experience, individuals tend to prefer a smaller instant gratification at the expense of a greater cost in the longer term (a “vice”); when the consumption experience comes later than the decision, the tendency is to prefer the option with a larger benefit in the longer run with a smaller earlier cost (a “virtue”). A nice paper by Daniel Read, George Loewenstein and Shobana Kalyanaraman in 1999 [“Mixing Virtue and Vice: Combining the Immediacy Effect and the Diversification Heuristic“, Journal of Behavioural Decision Making, 12, pp257-273] runs an experiment using high and low brow videos as relative virtues and vices.

The aim is to take this framework and run a field experiment. This has two big advantages:

  1. It allows an extra dimension to be added to my paper, in investigating the methodological issues surrounding the external validity of laboratory experiments. This boils down to the relationship between behaviour in the artificial environment of the lab and the behaviour observed in the real world. “Subjects” are unaware they are participating in an “experiment” and their behaviour is real economic behaviour; overcoming two potential criticisms of lab experiments.
  2. It makes obtaining data much cheaper and easier! Instead of recruiting subjects (difficult over the summer university break) and finding a research budget to fund the experiments (incentives are important to subjects), I can (hopefully!) obtain a free data set and extract some interesting conclusions.

While details are sketchy at the moment, the aim is to consider people’s behaviour in watching television online. My expectations are that faced with the ability to decide on a program to be watched instantly (by streaming online) people tend to head towards the low brow end of the spectrum, while programs downloaded to watch at a later date (and may expire unwatched) are more likely to be high brow.

However, all the above relies upon available data and this may not be easy to come by. It is an area of economics I’ve barely touched upon so far in my studies so would require rather extensive reading to get up to speed on the latest theoretical developments and empirical/experimental techniques used in the area.

The second route involves the topic of leadership, which has only over the past few years been considered by the economics literature in any depth. For an earlier experimental economics module, I (with 3 others) designed an experiment investigating the effect of leadership (see my earlier blog post about this here). The same problems of subject pool and budget apply here too if I wanted to actually run this experiment on a larger scale, or indeed a series of other experiments to get at some other interesting questions (how to pay the leader with increasing the “sucker” effect, differences between leaders with the power to either reward or punish, the importance of information and common knowledge in order to lead or be led, and so on…). It is an area I’m far more familiar with, which helps to get the basics correct, and there’s plenty of scope to develop an interesting dissertation. However, I can’t help but feel that spending the next 3 months designing a series of experiments that ultimately I won’t have the opportunity to actually run could be disappointing…

… so it looks like I’m heading down the time route then, based on the above stream of conciousness!

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