"Experimental economics research shows that small institutional adjustments can make a big difference."
John & Hallie Quinn Eminent Scholar in Economics
"People are a lot more cooperative in the donation of time, effort, and money than economists might think they are, but they are lot less cooperative than idealists think they will be," says Mark Isaac, one of America's leading experimental economists. "I ask my students repeatedly, are economists correct when they talk about people free riding? The answer is 'yes' in that coffee drinkers will sometimes fail to add money to the office coffee pool, but the answer is 'no' in that they don't always behave that way."
When it comes to studying economic efficiency and rational policymaking, Isaac stands out—he evaluates the allocation of public goods and economic resources by studying market-related decisions made by individuals, institutions, and society in general.
In the laboratory, Isaac, his colleagues Tim Salmon, T. K. Ahn, and Svetlana Pevnitskaya, and their students test simple theories about how various markets operate and evaluate new formulations for how markets ought to be structured. For instance, what kinds of things influence the level at which people will provide public goods (the coffee pool)? Isaac says many things can move the outcome one way or the other. "In small groups, if you can get people to look each other in the face and communicate, it helps amazingly." This idea, when first published, was met with great skepticism by most economists, "because it was totally outside the realm of what they were used to thinking." Yet, things can also unravel quickly, to minimal provision, so Isaac and his fellow experimental economists "have identified a whole series of things that might matter."
One of Isaac's current projects, looking at small charities that want to maximize the amount of money raised, combines his interest in how people provide public goods with his interest in auction markets, and has raised questions that could apply to all charities, yet be specific enough to be useful to one.
"Experimental economics research shows that small institutional adjustments can make a big difference," says Isaac, whose research is funded by the National Science Foundation. "In an economics laboratory we set up small, real-group organizations that have the critical features or incentive structures that are either part of our theory or are a part of the industry that we are examining."
Isaac "fell in love" with experimental economics as a graduate student. Now, he takes his students' studies very seriously. He teaches undergraduates the basics of experimental economics and Honors students the principles of economics. Often, he co-authors papers with graduate students, "a standard progression" for them in this cooperative, team-oriented field.
Isaac is the editor of the Research in Experimental Economics book series, on the board of editors of the journal Experimental Economics, and treasurer of the Economic Science Association. He was the lead proposer on the Pathways of Excellence cluster hire proposal for his field. When these faculty members are hired, Florida State will be one of the strongest centers of Experimental Social Science in the U.S.