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Abstract:
The experiment described here has the problems of economic stabilisation in mind, but, mainly for reasons of simplicity, it tackles the problem in the field of biology. A biotope consisting of two populations - hares and foxes - should be brought to a stationary fixpoint level by means of four different instruments. In each treatment of the experiment, however, only one instrument can be used to reach the two-dimensional goal. In the treatment described here in more detail the subjects had to decide about adding or taking away certain numbers of hares to reach the equilibrium point. This sort of direct intervention causes changes in both populations.
Our aim is mainly to collect information about the behaviour of the subjects and the heuristics adopted by the participants. We ask questions about the prominence of numbers and we are able to figure out useful explanations with empirical evidence.
Keywords: Experimental economics, predator-prey model, Goodwin's trade cycle theory, business fluctuations, Lotka-Volterra-model, heuristics for stabilisation processes, prominence of numbers.
1 Introduction
In 1967 R. M. Goodwin contributed his model to the theory of trade cycles. Since then a large number of variations have been investigated. The study of our experiment here concentrates on how to influence a business cycle with appropriate economic measures. It can be shown easily to the subjects with the help of some diagrams describing which sort of business fluctuations occur persistently.
The state variables of our system are the employment rate, which moves cyclically between about 90 and 100 percent, and labor's share of national income, which shows within a certain time-lag the analogous business fluctuations. On the basis of the diagrams it is possible to recognize that the length of the cycle is about 13 time periods, which means that one period should correspond to about 4 months.
The subjects had the choice to influence wage settlement as one of the representatives of the government. A player of the game should intend to stabilize the system in an efficient way. The aim of the interventions into the economic process should be the elimination of the business fluctuations, such that the system will move on a continuous state path in the direction of an equilibrium.
There is a large number of similar...