Behavioral Economics
Behavioral economics is an exciting area of research that lies at the interface between psychology and economics. Our approach to behavioral economics aims to develop a laboratory-based token-economic system, in which tokens are earned, accumulated, and exchanged for other commodities. Such behavior lends itself to an economic analysis: the production of tokens is akin to a wage, exchange rate to the price of a good, the production of exchange opportunities to procurement costs, accumulation of tokens to savings, and exchange of tokens for other goods to expenditures. Building on an extensive body of animal research, our research uses pigeons as workers in a miniature and self-contained economy. Because the token system is modeled after monetary-based economic systems, the procedures bring within reach a wide range of economic variables never before studied in the animal laboratory, and with it, exciting new possibilities for an experimental analysis of economic behavior.
Demand Elasticity and Substitution
How does the demand for a particular commodity change as a function of its price? How does it change as a function of the availability of other commodities? Are generalized token commodities stronger and more resistant to change than specific ones? Under what conditions does one commodity substitute for another? To what extent is demand a unitary construct (i.e., do different measures of demand—response output, persistence, preference—covary with one another)?
Token Accumulation and Savings
Under what conditions do animals accumulate (or save) tokens for later exchange? How is such saving related to wages (price of earning tokens), procurement costs (price of exchanging tokens), income (overall availability of tokens), interest (incentives for accumulation), and taxes (penalties for accumulation)?
Symmetry between Losses and Gains
Are gains functionally equivalent to losses? Much research with humans suggests the answer is No: People tend to avoid losses more strongly than they seek gains. Prior work with animals has not been very informative because of qualitative differences in gains (typically food) and losses (typically shock). Token systems, however, utilize a common currency in which gains and losses can be functionally calibrated, permitting an analysis of losses and gains in conceptually analogous terms. This allows us to assess the cross-species generality of the asymmetry between losses and gains.