HSS 50th Anniversary Lecture
Plott has been a pioneer in the field of experimental economics and political science since joining the HSS faculty in 1971. He has developed experimental methods to test and better understand economic and political theories. Plott has led the way in using controlled laboratory settings with real-life participants to evaluate and devise mechanisms to apply in policy and business settings, including such areas as natural resources, transportation, communications, and financial markets. This work continues today in his Laboratory for Experimental Economics and Political Science (EEPS), which has served as a model for other laboratories around the world. Among his many achievements, Plott was elected to the National Academy of Sciences in 2007.
Markets collect and aggregate information that is dispersed in small amounts across the population. For example, almost daily we read about market dynamics that reflect expectations and beliefs that forecast events. Sports betting and the betting odds in horse races are known to be close to the actual frequency with which winners occur. In recent years experimental economists gained some understanding of the principles at work in such examples and can now use them to design tools, called "information aggregation mechanisms," for the collection and aggregation of (soft) information held in the form of individual opinions scattered across many people. The purpose is explicitly to capture and quantify information that is otherwise held in small amounts across many people in the form of intuition and weakly held beliefs. The lecture will focus on information aggregation mechanisms, what they do and how they work. The presentation will focus on the basic behavioral principles as found in laboratory experiments and applications to sales forecasting and opening box office of movies.