Sunday, June 05, 2005

Wow!

See the amazing experimental results summarized in this column by Steven Levitt (and Stephen Dubner) in the Times Magazine tomorrow. The authors elaborate a bit more here. I wonder if they have discovered any potential "Gibbon goods." Hahahaa....

These kinds of experiments have been done before and with lots of different animals but none have demonstrated economic behavior at this level of complexity. They typically have mice pull levers to get food...when they increase the number of pulls to get food the mice eat less. Basically this shows that mice understand trade-offs. But I don't think that adding the additional abstraction of money has ever been done before. And these monkeys demonstrate behavior remarkably similar to "homo economicus" from intermediate microeconomics.

Beyond that, the monkeys show cooperative behavior in repeated games. They also emulate human behavior in that they will get angry and retaliate against monkeys who are trained never to cooperate and take advantage of monkeys who always cooperate.

There are so many possibilities as to where this research can go...one path would be to see if the monkeys demonstrate saving behavior. Put them in a two-period situation, give them money and see how they allocate it. Do they think ahead? If they do, how much do they value future consumption? What is their discount rate? Can they handle an interest rate? What if it changes?

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