Exploring the Meaning of Significance in Experimental Economics

18 Pages Posted: 19 Nov 2013  

Le Zhang

Curtin University - School of Economics and Finance

Andreas Ortmann

UNSW Australia Business School, School of Economics

Date Written: November 16, 2013

Abstract

Null Hypothesis Significance Testing has been widely used in the experimental economics literature. Typically, attention is restricted to type-I-errors. We demonstrate that not taking type-II errors into account is problematic. We also provide evidence, for one prominent area in experimental economics (dictator game experiments), that most studies are severely underpowered, suggesting that their findings are questionable. We then illustrate with several examples how poor (no) power planning can lead to questionable results.

Keywords: Null Hypothesis Significance Testing, Type-I-errors, Type-II errors, Significance level, Statistical power

JEL Classification: A10, B23, C12

Suggested Citation

Zhang, Le and Ortmann, Andreas, Exploring the Meaning of Significance in Experimental Economics (November 16, 2013). UNSW Australian School of Business Research Paper No. 2013-32. Available at SSRN: https://ssrn.com/abstract=2356018 or http://dx.doi.org/10.2139/ssrn.2356018

Le Zhang (Contact Author)

Curtin University - School of Economics and Finance ( email )

Kent Street
Perth, WA 6102
Australia

Andreas Ortmann

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

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