Description:

The purpose of the course is that students get an understanding for the method “experimental economics”. At the beginning of the course students have to present papers that discuss the pros and cons of that method. They will learn for what kind of research questions this method is best suited but they will also be able to understand its limits. In the second part students will get a precise understanding about the usage and appropriate design of economic experiments. Especially, they will acquire the knowledge to set up experiments based on existing research questions. Here, we will discuss state-of-the-art experimental work horses and statistical techniques to set up and analyze experiments. The course is meant as an interactive class with students’ active participation, exercises and student presentations. There will not be a final written exam. Instead students will have to build groups and develop own research ideas, which they will have to present to the class.     

Outline:

Syllabus (preliminary)

I. Students Presentations: “Introduction to Experimental Economics”

II.  Experiments: Research Approaches/Questions 

• Purpose of Experiments
• Data Sources
• Research Questions: Examples 

III. Principles of economic experiments

• Rules of the Experiment
• Laboratory Methods                                            

IV.  Structure of Experiments

• Direct control in Treatments
• Indirect Control
• Examples 

V.   Experimental Subject Pools and Environments 

• Subject Pool Effects
• Framing Effects
• Potential Problems 

VI.  Design of Instructions 

• Language and setup
• The role of framing
• Tools/Methods to instruct subjects
• Examples 

 VII. Conduction of Experiments

• The role of anonymity
• One-shot vs. repeated interaction
• Format of Experiments
• Experiments and Questionnaires 

VIII. Standards and Methods in Experimental Economics 

• Popular „Work Horses“
• Special Methods
• Modifications 

IX.  Data Organization and Statistical Analyses 

• Matching Procedures
• Independent/Dependent Observations
• Test Methods 

X.  Final Students Presentation: “Approaching research questions with lab experiments”

Literature:

Main Literature

• Friedman, D., and Sunder S., Experimental Methods: A Primer for Economists Cambridge University Press, 1994
• Friedman D., Cassar A., Economics lab, an intensive course in experimental economics, Routledge, London, 2004
• Colin F. Camerer, Behavioral Game Theory, Princeton University Press, 2003

Paper Choice for Session 1

· Atlas, S.A. "Inductive metanomics: Economic experiments in virtual worlds." Journal For Virtual Worlds Research 1.1 (2008). 

· Bardsley, N., Cubitt, R., Loomes, G., Moffatt, P.,  Starmer, C., and Sugden, R. “Experimental Economics: Rethinking the Rules” Princeton University Press (2009). (Chapter 1.1 and Chapter 1.2)

· Binmore, K. “Why experiment in economics?” The Economic Journal, 109.453 (1999): 16–24.

· Camerer, C. F., and Loewenstein, G. "Behavioral economics: Past, present, future." Advances in behavioral economics 3 (2004). (Chapter 1, p.3-42)

· Charness, G., and Kuhn, P. "Lab labor: What can labor economists learn from the lab?" Handbook of Labor Economics 4 (2011): 229-330.  (Up to p. 16)

· Falk, A., and Fehr, E. "Why labour market experiments?" Labour Economics 10.4 (2003): 399-406. & Falk, A., and Heckman, J. "Lab experiments are a major source of knowledge in the social sciences." (2009). (Note, the talk has to cover both papers)

 · Harrison G.W. and List, J.A. “Field Experiments” Journal of Economic Literature, 42 (2004): 1009-1055.

 · Horton, J.J., Rand, D.G. and Zeckhauser, R.J. "The online laboratory: Conducting experiments in a real labor market." Experimental Economics 14 (2011): 399-425.

· Levitt, S.D., and List, J.A. "What do laboratory experiments measuring social preferences reveal about the real world?" The Journal of Economic Perspectives 21 (2007): 153-174.

· Loewenstein, G. "Experimental Economics from the Vantage-Point of Behavioral  Economics," The Economic Journal, 109 (1999): 25-34.

· Plott, C.R. "Will economics become an experimental science?" Southern Economic Journal (1991): 901-919.

· Plott, C.R. "Industrial organization theory and experimental economics." Journal of Economic Literature 20 (1982): 1485-1527.

· Schram, A. "Artificiality: The tension between internal and external validity in economic experiments." Journal of Economic Methodology 12 (2005): 225-237.

· Smith, V.L. "Economics in the Laboratory." The Journal of Economic Perspectives 8 (1994): 113-131.

Methods of Assessment:

student presentations

Formalities:

Please just come to the first class if you are interested in attending the course. However, if you are interested in getting the credits attendance to every session is mandatory!!