S.O3-21
0
SIMON FRASER UNIVERSITY
Senate Committee on University Priorities ?
Memorandum
TO: Senate
RE
Centre for Research on Adaptive
Behaviour in Economics (CRABE)
FROM: ?
John Waterh
nair,urA
Vice Presid
emic
DATE:
?
January 10, 2003
Attached is the proposal for the establishment of the Centre for Research on Adaptive
Behaviour in Economics submitted for consideration by Dr. John Pierce, Dean of Arts.
This will be a Schedule A Centre reporting to the Dean of Arts in accordance with
Policy R 40.01.
The Senate Committee on University Priorities reviewed the proposal at its January 8,
2003 meeting. The proposal was unanimously approved. Once approved by Senate,
the proposal will be submitted to the Board of Governors.
Motion:
.
?
That Senate approve and recommend to the Board of Governors the
establishment of the Centre for Research on Adaptive Behaviour in Economics as
outlined in document S.03-21
end.
c. J. Arifovic, Department of Economics
B. Clayman, VP Research
J. Pierce, Dean, Faculty of Arts
0
SCUP 03 - 004
.
?
SIMON FRASER UNIVEIs1'ry
MEMORANDUM
?
OFFICE OF VICE-PRESIDENT, RESEARCH
TO: Laurie Summers, Secretary
Senate Committee on University
Planning (SCUP)
FROM: Bruce P. Clayman
Vice-President, Research
RE: Centre for Research on Adaptive
?
DATE: December 9, 2002
Behaviour in Economics (CRABE)
Attached is a proposal from Dr. Roger Blackman, Acting Dean of Arts, for the
establishment of a Centre for Research on Adaptive Behaviour in Economics (CRABE)
as a Schedule A Centre.
The Governing Committee for Centres and Institutes recommends that the
Centre be granted approval by SCUP. Once approved by SCUP, the proposal is to be
forwarded to Senate, followed by submission to the Board of Governors.
Governing Committee:
f.fohn H. Waterhouse
Vi ,
'e-President, Academic and Provost
Dr. Bruce P. Clayman
Vice-President, Research
Attachment
C:
?
J
.
Arifovic, Director, Centre for Research on Adaptive Behaviour in Economics in
the Department of Economics (CRABE)
.
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SIMON FRASER UNIVERSITY
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S
Office
MEMORANDUM
of the Dean, Faculty of
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Arts
NOV
2 5 ?00
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2
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To: ?
John Waterhouse ?
From: Roger Blackman------"
Vice-President Academic
?
Acting Dean of Arts
Subject:
CRABE: Schedule A Centre
?
Date:
?
November 15, 2002
recommendation
This proposal for a
Centre for Research on Adaptive Behaviour in
Economics
has my enthusiastic support. Spearheaded by Dr. Jasmina Arifovic
and with the active involvement of several of her colleagues in the Department of
Economics, the prospects offered by CRABE have stimulated faculty members'
interest in disciplines as varied as biology, business, computing science,
linguistics, philosophy and psychology. What has captured their imagination is
the potential for research into experimental and behavioural economics that
focuses on the way people learn, adapt and evolve in economic environments.
The awarding of a share of the 2002 Nobel Prize in Economics to Daniel
Kahneman for relatively contemporary research based on his "integrated insights
from psychological research into economic science" suggests that the time is
right for these sorts of investigations.
For a Centre with what might seem like a specialized focus, CRABE will
have interests in common with surprising number of existing research clusters at
SFU, including the Behavioural Ecology Research Group, the Centre for Public
Policy Research, the Computational Linguistics Research Group, the
Evolutionary Psychology Research Group, and the Intelligent Systems
Laboratory. Moreover, although there is only one other clearly identified
Canadian research centre in this field (at McMaster), CRABE will have cognate
organizations at several of the top universities in the U.S. and Europe.
With a relatively modest investment of resources, CRABE holds the
promise of harnessing a significant portion of our faculty members' intellectual
efforts and applying them to an academically ripe and socially important field of
investigation. I am providing CRABE with a start-up grant of $8,000 to be
matched separately by both the Economics Department and Dr. Arifovic. That
will cover the initial Research Assistant and computer hardware/software needs
CC: Dr. Jasmina Arifovic. Department of Economics
Greg Dow, Chair, Department of Economics
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.
DEPARTMENT OF ECONOMICS
?
WEST MALL COMPLEX
December 2, 2002
eceived
by
SIMON FRASER UNIVERSITY ?
DEC 6-
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UNIVERSITY
President
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BURNABY, BRITISH COLUMBIA
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Telephone: (604) 291-3508
Fax: (604) 291-5944
Web: hp://ww/onj
To: ?
Bruce Clayman
Vice President, Research
From: Greg Dow
Chair, Department of Economics
Re: ?
Centre for Research on Adaptive Behavior in Economics
;10--CL,
In response to your recent inquiry, this is to confirm that the proposed Centre for Research
on Adaptive Behavior in Economics will have no budgetary implications for the university
beyond $8000 in start up funding from the Dean of Arts office in the first year.
This amount will be matched by the Department of Economics as well as the acting director
Jasmina Arifovic through a research grant, for a total of $24,000 in start up funds for staff
support and computer equipment.
CRABE will be housed within the Department of Economics and will use the departments
computer lab to conduct experiments involving human subjects, unless alternative facilities
can be financed externally. All other funding will be from external sources.
Please let me know if you have further questions concerning CRABE.
cc: ?
Jasmina Arifovic
?
-
?
Roger Blackman
Valerie Murdoch V
John Waterhouse
3
DEC-09-2002 13
: 12
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SFU
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Public Policy Research
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P.02
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To: John Pierce, Dean of Arts
From: Jasmma Arifovic, Director
Re: Centre for Research on Adaptive Behaviour in Economics (CRABE)
Date: May 14, 2002
This is an application for the establishment of the Centre for Research on Adaptive
Behaviour in Economics in the Department of Economics.
Attached is a Constitution for the Centre, a description of the Centre's objectives (Terms
of Reference), and a three-year plan. We have incorporated changes to the above
documents suggested by you and VP Research, Bruce Clayman. We have also consulted
with other SFU departments, research groups and centres that might be interested in
collaborating with CRABE at various levels as well as with a number of individual
faculty members in other departments that may be interested in CRABE's.activities.
As a result of these consultations, we have identified research groups and individual
faculty who are interested in developing linkages with the Centre's activities. We have
accordingly revised our Terms of Reference to reflect this potential.
The faculty of the Department of Economics involved with the Centre's activities are
• Jasmina Arifovic, Lawrence Boland, John Chant, Gregory Dow, Stephen Easton, Jane
Friesen, Anita Gantner, Robert Jones, Kenneth Kasa, Jack Knetsch, Brian Krauth, Steeve
Mongrain, Gordon Myers, Nancy Olewiler, and Krishna Pendakur.
Until the Centre is formally approved, the members of the ad hoc Steering Committee
are: Jasmina Arifovic, Kenneth Kasa, Jack Knetsch, Steeve Mongrain, Gordon Myers,
Nancy Olewiler and Gregory Dow. The members of the ad hoc Steering Committee have
proposed Jasmina Arifovic as the director of the Centre.
According to the Constitution of the Centre, once it is formally approved, the Centre's
official Steering Committee will consist of three members of the SFU Department of
Economics and two SFU faculty members from cognate disciplines, plus the Director of
the Centre, and the chair of the Department of Economics as an ex officio member;
The following people have agreed to serve on the Steering Committee once formal
approval for the Centre is granted: Jasmina Arifovic (economics) as Director, Anita
Gantner (economics), Kenneth Kasa (economics), Jack Knetsch (economics and natural
resources), William Havens (computing science), Paul McFetridge (linguistics), and
Gregory Dow (economics), Chair of the Department of Economics as ex officio member.
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The Centre's Associate members within the University are:
Michael Brydon (business),
Charles Crawford (psychology), Lawrence
Dill (biology),
Andrey
Pavlov
(business),
Bernard Roiteberg (biology),
and
Oliver Schulte (computing science
and
philosophy).
We
are
also working on identifying researchers from other universities whose
interests
overlap
with
the Centre's activities
and
who might be interested in being involved as
Associate Members.
Best regards,
.
4;
jlz^
asnuna
Arifovic
.
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CENTRE FOR RESEARCH ON ADAPTIVE BEHAVIOUR IN ECONOMICS
Constitution
1.
Objectives
The activities and the program of the Centre for Research on Adaptive Behaviour
in Economics are intended to initiate and promote research related to
experimental and behavioural economics, and computational methods for the
study of learning, adaptation and evolution in economic environments. The centre
will facilitate the conduct of faculty and student research projects by providing
infrastructure for computer simulations, economic experiments with human
subjects and survey studies. The Centre will also organise conferences, colloquia,
visiting speakers' seminar series and visiting scholars' programmes.
2.
Administration
2a
The Centre for Research on Adaptive Behaviour in Economics shall be
governed in accordance with University Policies including R.40.01,
CENTRES AND INSTITUTES. If this document and University policy
differ on any issue, University policy shall prevail.
2b The Centre for Research on Adaptive Behaviour in Economics is a
Schedule A Centre (R.40.01, page 2) and comes under the direct authority
of the Dean of Arts.
2c ?
The Centre for Research on Adaptive Behaviour in Economics is housed
in the Department of Economics.
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3. Appointment of Directors
3a
The Director of the Centre shall be appointed by the Dean of Arts on the
recommendation of the Centre's Steering Committee. The term of office
shall normally be for three years.
3b ?
In the absence of the Director, an Acting Director may be
-
drawn from the
Centre's Steering Committee.
4. ?
Internal Governing Procedure
4a ?
The Centre shall be governed by a seven person Steering Committee made
• ? up of three members from the faculty of the SPU Department of
Economics and two SFU faculty
I
members from cognate disciplines, plus
•1
the Director of the Centre with the chair of the Department of Economics
as an ex officio member. Members of the Steering Committee will be
appointed by the Dean of Arts with the advice of the Director.
Appointments shall be for a three-year term.
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The Steering Committee shall be chaired by the Director of the Centre.
Meetings will normally take place once a month.
5. Associate Members
The Centre shall consist of a body of interested associates from both within, and
outside of, the University community, as well as individuals linked to the Centre
through the projects and other activities it sponsors and supports. Associate
member status is proposed by the Director and approved by the Steering
Committee.
S
S
•1
CENTRE FOR RESEARCH ON ?
ADAPTIVE BEHAVIOUR IN ECONOMICS
Terms of Reference
The Centre for Research on Adaptive Behaviour in Economics (CRABE) will provide a
focal point for faculty and students interested in experimental and behavioural
economics, processes of learning and evolution in various economic environments, and
computational methods for modeling such processes. Housed in the Department of
Economics, CRABE will establish and maintain facilities, materials, personnel, and other
resources dedicated to the exploration of adaptive behaviour in economics.
Researchers from cognate disciplines such as computer science, philosophy, psychology,
cognitive science, linguistics, business, biology, and mathematics will be encouraged to
participate in the activities of the Centre.
The Centre's initial objectives are:
• To conduct research on adaptive behaviour in economics and related disciplines
• To develop suitable courses in economics to train undergraduate and graduate
students and serve as a teaching resource for other programs such as the Master's in
Public Policy (MPP)
•
• To raise funding to attract doctoral and postdoctoral students interested in adaptive
behaviour in economics
? -
• To develop linkages with other research centres and groups at Simon Fraser
University, for example, Behavioural Ecology Research Group (BERG), Centre for
Public Policy Research (CPPR), Computational Linguistics Research Group,
Evolutionary Psychology Research Group, Intelligent Systems Lab
• To coordinate and host conferences, and publish conference proceedings
• To organise workshops, and invite and host visiting speakers, scholars and
researchers
• To develop formal models of learning and evolutionary dynamics relevant for game
theory, mechanism design, organisation theory, macroeconomics, labour economics,
finance, and other fields
• To develop software for the conduct of experiments with human subjects in various
economic environments
• To develop commercial software for testing economic models under various
behavioural assumptions, using both experiments with human subjects and computer
simulations.
Adaptive Behaviour in Economics
The foundations of modem economic theory are based on the hypothesis that economic
agents are rational, with full understanding of their environment and in particular of the
. ?
stochastic processes governing the behaviour of key exogenous and endogenous
variables. Given this understanding of the environment, agents formulate optimal
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decisions in order to pursue their own welfare. To perform these calculations, agents
need a sophisticated knowledge of various mathematical and statistical methods (e.g.
dynamic programming in stochastic environments, intertemporal optimisation, taking
mathematical expectations in complicated environments, etc.). Using this
rational
expectations hypothesis,
researchers have made important advances both theoretically
and in practice.
Despite its wide acceptance in economics, the rational expectations hypothesis continues
to be controversial. Many researchers believe that it rests on implausible informational
assumptions. As an alternative, models of learning and adaptive behaviour have gained in
importance over the last decade. These models depart from traditional economic theory
by assuming that economic agents are boundedly rational (to varying degrees). Further,
they assume that economies are inhabited by heterogeneous, interacting agents who learn
about their environment, update their beliefs and strategies, and make economic
decisions. This updating of individual beliefs and the resulting decisions in turn affects
economic outcomes. Usually, the interactions between agents and economic environment
result in non-linear self-referential systems with complex and interesting dynamics.
These models have been able to capture important features of the behaviour observed in
experimental laboratories with human subjects which are not accounted for in traditional
theory. In addition, these models can explain some empirical facts about economic time
series that again traditional theory cannot account for. Moreover, experimental data can
be used to test competing hypotheses and models of agents' learning, and to narrow the
class of plausible algorithms.
Models of adaptive behaviour can provide computer testbeds for a thorough search over
the space of parameters that are relevant for the model's performance. Using experiments
with human subjects to study these effects is often prohibitively expensive in monetary
and time resources. Computer testbeds are not only significant in themselves but they can
provide a way to sort out what the most important experiments might be.
Experimental economics has found increasing use in exploring issues such as how people
react to different market or auction rules, their choices under uncertainty, and the relative
efficiency of alternative market and non-market allocative institutions. Results have been
used, for example, to determine allocation of airport 'slots,' to improve rules of securities
exchanges, and to design auctions for awards of communication channels.
Behavioural economics grew out of the interests of market researchers, cognitive
scientists and social psychologists. While much of this work has been carried out using
experiments, behavioural economics also uses other research methods such as survey
techniques. Some of the most prominent findings have raised serious questions about
traditional behavioural assumptions in economics. Results from behavioural economics
are also being applied in finance and law, and have been shown to be important for
environmental issues.
All of this research has grown rapidly during the past decade. A strong complementarity
among these areas has also developed. For example, it has become common practice to
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test theoretical models of individual behaviour through experiments with human subjects.
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In turn, the results from experiments with human subjects have guided the direction of
subsequent theoretical research in economics.
The Need for the Centre
To our knowledge there are only three centres worldwide which are organised to exploit
the complementarity between experimental and behavioural economics, on the one hand,
and the study of learning and evolution in economic environments, on the other. These
are: the Institute for Empirical Research in Economics, University of Zurich; the ESRC
Centre for Economic Learning and Social Evolution at the University College of London;
and the Computable and Experimental Economics Laboratory at the University of Trento.
There are a number of centres for experimental economics worldwide. These include one
in Canada, the McMaster Experimental Laboratory. There are also at least four centres
for computational social science in the U.S. (Carnegie-Mellon University, University of
California at Los Angeles, University of Michigan at Ann Arbor, University of
Wisconsin at Madison). To our knowledge, no North American centre combines
experimental work with research on computational methods.
In addition to academic research, there is considerable scope for collaborative work with
• private companies interested in applying the results of experiments with human subjects,
as well as computer simulations based on behavioural models. An example involves
those companies interested in carrying out trading and auctions through the Internet.
Finally, linkages that will be developed between CRABE and the proposed Centre for
Public Policy Research, as well as the teaching program leading to a Master's in Public
Policy. CRABE would create an environment for teaching and research not duplicated
by other graduate public policy programs in Canada. One potential linkage involves
environmental policy analysis, where behavioural and experimental economics come into
play in at least two ways: simulating the actions of market participants, and eliciting
information about individual preferences in situations where markets do not exist.
In summary, the Centre would fill an important niche and enhance the international
reputation of the University, making it a world leader in this field of research.
Revision of These Terms
The Centre for Research on Adaptive Behaviour in Economics will revisit, revise and re-
endorse these Terms of Reference on an annual basis, or more frequently upon election.
Structure, Membership, and Governance of the Centre
The Centre for Research on Adaptive Behaviour in Economics will be housed in the
Department of Economics, Faculty of Arts, at Simon Fraser University. The Centre will
II ?
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be administered by a Steering Committee made up of three members of the Department
of Economics and two SFU faculty members from cognate disciplines, each to be
appointed by the Dean of Arts for a term of three years, plus a Director, with the chair of
the Department of Economics serving on the Committee in an ex officio capacity. The
Dean upon recommendation by the Steering Committee will appoint the Director of the
Centre.
The Centre will also appoint a number of Associate members from both within, and
outside of, the University community, as well as individuals from government and the
private sector who will be linked to the Centre through the projects and other activities it
sponsors and supports. Associate member status is proposed by the Director and
approved by the Steering Committee.
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CENTRE FOR RESEARCH ON ADAPTIVE ECONOMIC
BEHAVIOR
Three Year Plan
Plan: 2002— 2005
A three-phase plan will guide the Centre's initial development.
Phase One:
January 2002 - January 2003
Preparation of proposals for funding from government and private sources.
Initiation of the activities related to development of software for experiments with human
subjects and for computer simulations.
An undergraduate class in behavioural economics taught in the spring and fall of 2002.
Seminar series starting September 2002.
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Preparation for the first conference that the Centre would organise.
Further exploration of possibilities for internal and external collaborative research.
Phase Two
January 2003 - January 2004
The Centre organises a conference on adaptive behaviour in economics in the spring of
2003. ? -
The Centre's visiting scholars' program begins.
First graduate class in experimental economics taught in the fall of 2003.
First graduate class in modelling of adaptive behaviour taught in the spring of 2004.
Development of software for particular applications in experimental economics and
modelling of adaptive behaviour.
Exploration of private sector interest in software or services the Centre could provide.
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Phase Three
January 2004 - January 2005
The Centre publishes proceedings from its first conference.
The Centre organises a second conference.
Other activities continue as described above.
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