The BCD of Response Time Analysis in Experimental Economics
41 Pages Posted: 26 Feb 2014 Last revised: 29 Mar 2016
Date Written: March 28, 2016
For decisions in the wild, time is of the essence. Available decision time is often cut short through natural or artificial constraints, or is impinged upon by the opportunity cost of time. Experimental economists have only recently begun to conduct experiments with time constraints and to analyze response time (RT) data, in contrast to experimental psychologists. RT analysis has proven valuable for the identification of decision processes, model comparison/selection and the investigation of heuristics that combine speed and performance by exploiting environmental regularities. Focusing on strategic decision making, we discuss the benefits, challenges, and desiderata (BCD) of RT analysis in decision making. Time-constrained decision making lies in the domain of procedural rather than substantive rationality. Consequently, unlocking the potential of RT requires the adoption of process-based models instead of outcome-based models. We critically examine different procedural models of choice and RT, and the various ways that time-constrained experiments can be conducted. We argue that RT analysis holds considerable potential for experimental economics, deserves greater attention as a methodological tool, and promises important insights on strategic decision making in naturally occurring experiments.
Keywords: Response time, experimental economics, procedural rationality, games, strategic decision making
JEL Classification: B40, C70, C91
Suggested Citation: Suggested Citation