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EC984: Experimental Economics

  • Eugenio Proto

    Module Leader
15/18 CATS - Department of Economics
Spring Module

Principal Aims

The module will introduce students to issues and principles of experimental design, conduct and analysis across the areas which have been the main subject matter of experimental economics - markets, public goods, game theory and individual decision making. It will encourage students to consider the scope and limitations of 'laboratory' experiments in economics and to compare this research tool with others such as surveys and field experiments.

Principal Learning Outcomes

Critically evaluate the strengths and weaknesses of applying experimental methods in economic research - and in particular, identify the different areas of economic behaviour where such methods are more or less useful; Demonstrate understanding of and apply basic principles of experimental design, conduct and analysis; Demonstrate ability to critically evaluate key experiments in the different areas where experimental methods have most often been applied; Evaluate the main controversies in the field; Demonstrate understanding of how such methods might be used to address issues that are, as yet, unresolved.

Syllabus

The module will typically cover the following topics:

General Introduction: historical background and what experiments in economics might (not) be good for; relationship between experimental economics and behavioural economics; laboratory compared with field experiments and surveys; strengths and limitations; issues of validity and reliability.

Individual Decision Experiments: basic tools and methods; explorations/tests of decision making under risk and uncertainty; explorations/tests of intertemporal decision making; taking account of noise/error/imprecision.

Strategic Interaction: explorations/tests of ‘conventional’ game theory – normal and extensive form games; controlling ‘preferences’ and dealing with ‘attitudes to risk’ and ‘social preferences’; taking account of noise/error/imprecision and ‘depth of reasoning’.

Markets: forms of private value auctions – controlling ‘preferences’ and information; common value auctions and the winner’s curse; two-sided markets, particularly posted price and double auction markets.

Endowment effects and WTA/WTP disparities: consumer theory, endowment effects and the WTA/WTP disparities; evidence from one-shot experiments; evidence from repeated markets; theoretical explanations.

Field Experiments: definition of field experiments; artefactual field experiments; framed field experiments; natural field experiments.

Herding: brief outline of informational herding theory; tests of herding theory; extensions: prices and endogenous timing; applying error models to herding experiments.

Neuroscience Methods: the scope of neuroeconomics; basic tools and methods; individual decisions/preferences; interactive decisions and social preferences.

Retrospective and Prospective Discussion: something about the examination; strengths and limitations and ongoing controversies in experimental economics; possibilities for summer dissertations.

Context

Optional Core Module
C8P8 - Year 1
Optional Module
L1P6 - Year 1
Pre or Co-requisites
None

Assessment

Assessment Method
15 CATS - Coursework (100%)
18 CATS - 2 hour exam (100%)
Coursework Details
4000-word essay (100%)
Exam Timing
May

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