EVALUATION OF ECONOMETRIC MODELS. Some Comments on the Papers by Kagel and Battalio and by Smith Experimentation and Tests of Economic Hypotheses

Economists are justly proud of the increasing role which they play in the formation of practical public and private economic policy, and in great part this role has become available to us through the development of sophisticated methods for establishing quantitative counterparts to the abstract concepts which characterize economic theory. I believe that an equally important contribution to contemporary economics can be made in the laboratory, but that this contribution must take a rather different form: instead of estab-lishing numerical measures for well-known processes, experiments enable us to test the underlying behavioral hypotheses upon which all economic theory rests. It is from this perspective that I would like to discuss the Kagel-Battalio and Smith papers, so that my concern will be more with the method-ology and theoretical underpinning of these papers than with the specific experimental results. Both of these papers stress the principle that behavioral laws which apply in experimental settings can be expected to apply with equal force to less limited "real world " circumstances. Smith treats this "parallelism" virtually as an axiom, while Kagel and Battalio go even farther and extend the principle not only beyond the limits of the laboratory but across the boundaries of the human species as well. Unfortunately, as conceptual premises, neither statement of principle is made as precise and unambiguous as one might wish, and, indeed, each contains something of an "escape&quot