On Thursday, The Department of Economics & Decision Sciences at Western Illinois University held the event “Patently Risky: Framing, Innovation and Entrepreneurial Preferences” from 10-11 a.m. in Stipes Hall 121.
The event was open to the public. Elizabeth Hoffman has been a professor of economics at Iowa State University since 2012, and came to Western to give a lecture and presentation. Hoffman was introduced by Mathew Spritzer, professor at Northwestern’s Searle Center on Law, Regulation and Economic Growth, as a good life-long friend and emphasized her two Ph.D’s in economics and history. Hoffman also has her masters and her bachelors’ degrees in history.
The event aimed at covering the results from their shared research over the effects language, and how word framing can have a patent policy and entrepreneurial incentives. “Six years ago, we came together to from a research group, Hoffman said. Their goal was to have a better understanding on patent law and its effects on entrepreneurial incentives. Their job was to experiment with the wording and framing of a lottery survey to test if there is a direct link between framing and subject responses. Her job was not easy.
“I had to design experiments, and get them approved by the university review board,” Hoffman said.
The review board was not accustomed to differential payments to subjects and that Hoffman and Spritzer had to go before the University Review Board and explain what differential payments were and why they had to use them to pay the Turk subjects.
Amazon mechanical Turk subjects are individuals who sign up to participate in the experiment via online, since the pool of subjects is open to anyone and anywhere. The subjects tend to more closely represent the overall demographics of America as in age and level of education. Differential payments are given when subjects are working odd hours or shifts. Once the subjects for the experiment had been selected, Amazon mechanical Turks instead of university students since the Turk subjects where more representative of the American population regarding age and education.
The experiment consisted of various questions on whether the subjects would gamble in a lottery. The point was to see if wording and framing of the questions asked would have an effect of subject answers. The first set of questions where labeled as simple. “Choose Option A and keep $8 or choose option B and have a 1/3 chance of winning $30 and a 2/3 chance of only earning $3,” the question read.
The responses were then compared to the differently framed questions labeled investment.
“Choose to keep $8 or invest in a new technology with a chance of gaining $30 but with the risk of only making $3,” the second question read.
Overall, the experiment showed that wording did indeed have an impact and that the Amazon mechanical Turks risk taking behavior was slightly more risk averse on average. Indeed, as explained in Hoffman’s closing arguments, innovation frame induces much more risk acceptance, both in lab and on MT Turks.