New experimental economics lab doesn’t just play games

Dr. Mary A. Papazian

I recently attended a ribbon-cutting event celebrating SJSU’s new experimental economics facility, known as the Spartan Experimental Economics Lab (SEEL). 

I very much enjoyed speaking with such a venerable group of economists—including Nobel Laureate Dr. Vernon Smith, who shared the 2002 Nobel Memorial Prize in Economics Sciences for his contributions to Behavior Economics—and it was even more exciting to think about how this new lab will elevate San Jose State’s stature in the fast-growing experimental economics field.

Much of the study of economics is based on theory. What makes experimental economics so valuable is that it allows researchers to create interactive computer scenarios that provide the groundwork for the empirical assessment of those theories. If that sounds like a game, well, it is, in way. But it is serious and important gaming, to be sure.
 
To simplify matters, imagine a manufacturer of smartphones who needs to determine how much consumers might be willing to spend on a new product in order to arrive at a profitable price point. Or, perhaps that same company wants to understand what is likely to happen with sales figures if they raise an existing product’s price.
 
Well, that company can do a lot of surveys, conduct workshops, and go through a lot of trial and error to determine those things. They can look at established economic theory and make educated guesses, then cross their fingers and hope for the best. Whatever they do, it can take a lot of time, resources and money—especially if the guesses turn out to be off base.
 
But there is another option: they can engage in some experimental economics. And that is precisely what many large companies do, including those in the technology and retail sectors, using human “subjects” who play roles, make decisions, and perform actions based on scenarios built in to the computer simulations. These programs have data and a variety of information built into them to make things as realistic as possible.
 
The possible applications are endless, when you start to think about consumer behavior and the small but crucial details that impact that behavior. Companies and organizations from a multitude of sectors can “test drive” products, services, campaigns or initiatives before committing full resources to them. With regard to important regional and local economic issues of interest to public officials and businesses, imagine what could be learned through thoughtful SEEL partnerships or joint economic projects with the San Francisco Bay Area Planning and Urban Research Association (SPUR) or with the City of San Jose.
I have written—and will continue to write!—a great deal about SJSU activities that align with our Transformation 2030 strategic plan, and our investment in SEEL is another excellent example of how we are turning our plan into action.
 
The lab ties in directly with our commitment to supporting our faculty and staff in creating an engaging and dynamic intellectual environment so critical to any higher education institution. The primary objective in growing our Research, Scholarly and Creative Activities (RSCA), of course, is to position our faculty and students so that they can develop opportunities for innovations that we can then bring to society—opportunities now found with this new facility.
 
Prior to SEEL’s existence, the two SJSU faculty members who specialize in experimental economics had to travel to the University of California, Santa Cruz, or Chapman University to conduct their research. Because the research leverages students (as subjects who participate in the interactive computer scenarios), this meant opportunities for students at UCSC or Chapman—but none for our own Spartan students. That has all changed now!
 
The lab immediately catapults us into a top-tier leadership position in the experimental economics space. As it stands, there are only a few experimental economics labs around at all, and certainly very few that offer new equipment and dedicated space like our does.
 
In his remarks, Dr. Smith mentioned how inspired he was early in his career by Sidney Siegel, a social psychologist in the 1950s who laid the foundation of the field that would become experimental economics. It turns out that Mr. Siegel earned a bachelor’s degree at San Jose State College—the precursor to SJSU—in 1951 before moving on to his graduate studies at Stanford and his distinguished professional career. So now, with SEEL, it seems we have come full circle with experimental economics at San Jose State, and we should all be proud that an SJSU alum paved the way for many others.
 
I won’t mince words or our ambition in this area: we want San Jose State to be considered the research university in the entire CSU system. Our new experimental economics lab helps position us to be just that, and we invite companies and organizations to engage with us to identify innovative ways in which the lab can help with their objectives.
 
New labs like this do not just happen by accident, I should add. I would like to extend a sincere thanks to those who helped pull it off, starting with Colleen Haight for the vision and creativity she demonstrated in bringing this idea to fruition. Colleen is now serving as our Interim Associate Dean of Undergraduate Education, but what a fitting way this is for her to cap off her tenure as the chair of our economics department! And new department chair Rui Liu is picking up right where Colleen left off, and she and her staff member Alex Tejeda did much of the event planning for the ribbon-cutting celebration.
 

Others playing a significant role included the dean of SJSU’s College of Social Sciences, Walt Jacobs; our two lab co-directors, Justin Rietz and Aidin Hajikhameneh; our Facilities Development and Operations team; staff member Van Huynh; and our Information Technology group and its vice president, Bob Lim. Finally, the very creative and memorable SEEL logo was designed by staff member Patrice Hernandez.

Thanks again for everyone who played a role in this important new initiative!

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