Berkeley Opens High-Tech Lab

Berkeley Opens High-Tech Lab
To Support Social Science Research

BERKELEY, Calif.
The University of California at Berkeley Haas School of Business has launched the XLab — which is shorthand for Experimental Social Sciences Laboratory. The XLab is a high-tech facility to help economists, political scientists and other social scientists test their theories and to determine whether they can be applied to real-world problems in business and management. The XLab is expected to help lead a scientific revolution by bringing controlled laboratory experiments to social science fields that, until now, have not made much use of experimentation, according to officials.
In one example, Haas School Associate Professor Dr. John Morgan, an economist and the director of XLab, recently conducted an experiment in the facility to find out what produces greater revenue for sellers when a company is put up for sale — asking for payment in shares of stock, or in cash. The test supported the theory that shares bring in more revenue for the seller in a bidding contest.
 “This idea comes from the economics literature, but it hasn’t really made its way out of the ivory tower,” says Morgan. “With XLab, we assess whether the theory works in practice and whether it will have a big strategic payoff in the marketplace.”
To facilitate research, the XLab uses the latest wireless and notebook computer technology. The facility can accommodate up to 40 participants as experimental subjects and has use of 50 battery-powered, wireless laptops that can be easily moved on mobile carts.
In Morgan’s experiment, students took on the roles of corporate executives bidding against one another to buy a firm that was up for sale. The students in the experiment adopted a variety of real-world strategies in deciding how much to offer for the firm, using laptop computers outfitted with custom designed software that provided real-time information on bids to all participants and helped to calculate the consequences of various decisions. The students who came up with the winning strategies each would earn $50, providing incentive to play competitively.
“Within economics, for instance, experimental economics has not been recognized as a methodological tool until fairly recently,” says Morgan. “Now, there is growing recognition of the importance of the field as well as recognition that XLab is a critical tool to help us discover new knowledge.”
 The facility is also helping UC Berkeley graduate students learn about new methods to conduct research in their fields, and some are using XLab for their dissertations. “Generations of grad students will be influenced by being exposed to experimental methods, in addition to learning theory, econometrics and data analysis,” notes Morgan.
For more information, visit the XLab Web site at



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