Questions: Field Experiments

Question 1

A key advantage of field experiments over laboratory experiments is that...

• A. They always have larger sample sizes
• B. They test behavior in natural settings with real participants and stakes, increasing confidence that findings generalize beyond the laboratory
• C. They eliminate the need for randomization
• D. They are cheaper and easier to implement

Answer: (B)

The central advantage is external validity — behavior in real markets, workplaces, or policy contexts may differ from behavior in an artificial laboratory. Field experiments test whether lab findings hold when participants are experienced, stakes are genuine, and the institutional environment is complex. However, field experiments sacrifice some internal validity (less control over confounding variables) and are typically more expensive and logistically challenging than lab experiments — they are not easier to implement.

Question 2

List's field experiments on the endowment effect found that the WTA-WTP gap disappears for experienced market traders, challenging the universal applicability of the laboratory finding.

• T. True
• F. False

Answer: True

List (2003) conducted experiments at a sports card trading show and found that experienced traders showed no endowment effect — their WTA and WTP were approximately equal — while inexperienced traders showed the standard gap. This suggests that market experience can eliminate the endowment effect, possibly through learning, professional norms, or evolved decision rules for exchange goods. The finding illustrates the value of field experiments: a robust laboratory finding may have important boundary conditions that only appear in natural settings.

Question 3

What are the main ethical and practical challenges of conducting field experiments in economics?

Model answer: Ethical challenges include: randomization creates unequal treatment (some receive a beneficial intervention, others do not), informed consent may be difficult when participants are unaware they are in an experiment, and withholding effective treatments from control groups raises welfare concerns. Practical challenges include: maintaining randomization integrity in complex real-world settings, preventing spillover effects between treatment and control groups, ensuring adequate sample size, managing logistical complexity, and measuring outcomes accurately in uncontrolled environments.

The ethical tension is acute in development economics: if a program is believed to help, randomly denying it to a control group raises objections. Researchers address this through stepped-wedge designs (all groups eventually receive treatment), waitlist controls, and comparisons to 'business as usual' rather than active deprivation. The practical challenges explain why field experiments are expensive and time-consuming — a randomized evaluation of a microfinance program may require years of data collection, cooperation from governments and NGOs, and careful monitoring for implementation fidelity.