Guideline Questions for Your Experiment
GARP: Consumer Demand and Revealed Preference
Software
ComLabGames
(No programming, use menu to design your experiment)
jMarkets
from Caltech (for running large-scale, internet-based experiments
with multiple simultaneous markets)
LabSEE
Z-Tree Materials: Zipped Package
- Instructions on Using z-tree in
the B74 lab
- Overview
- Tutorial
- z-Tree
- z-Leaf
- YouTube Video Demo (on creating
a Public Goods Experiment - see Section 2.2 in Tutorial)
MS Excel Shared Workbook:
- Overview
- Instruction on Using Excel Shared Workbook in the B74 lab and sample spreadsheet
ConG (Continuous-Time Games software):
- Overview
- Instructions on ConG and Download link
Qualtrics (Survey instrument):
Amazon Mechanical Turk
(Intellectual input for simple tasks):
ACE (Agent-Based Computational Economics)
Classroom Experiments (
ESA Session on Classroom Experiments
"A
Classroom Matching Game"
Lisa Anderson (College of William and Mary),
Cathleen
Johnson, Robert Nelson, Liliana Pasyeka, Ragan Petrie, Nidhi
Thakur
"Real Interest Rates and Inflation in the
Classroom"
Sheryl Ball (Virginia Tech), Susan K. Laury
"Internet-Based Classroom Experiments"
Charles A. Holt (University of Virginia)
"Double Marginalization: A Classroom Experiment"
Narine Badasyan (Virginia Tech), Jacob K. Goeree,
Monica Hartmann, Charles A. Holt, John Morgan, Tanya Rosenblat
(Wesleyan University), Maros Servatka, Dirk Yandell
"Teaching Nash Equilibrium and Strategy
Dominance: A Classroom Experiment on the Beauty Contest"
Virtudes Alba-Fernandez, Pablo Brañas-Garza
(University of Jaén), Francisca Jimenez-Jimenez, Javier Rodero-Cosano
Ricardian Explorer (Wesleyan)
Personal Info---Research---Teaching
Instructor:
Shyam Sunder (209,
TA:
Wei Zhu (wei.zhu@yale.edu)
Course
Number: MGMT 703a (PhD) / ECON 488a (
When:
Fall 2012, Tuesday
Where:
CSSSI Statlab,
Recommended
Books (library reserved): Kagel and Roth,
Instructor
email: shyam.sunder@yale.edu, phone 432 6160
TA
email: wei.zhu@yale.edu
Student
level:
Number
of credits: One (1)
Analysis, modeling and data gathered from the field
have been the traditional sources of economic knowledge.
Experiments were confined to thought, and rarely included action. In the recent decades, economists have utilized laboratory experiments to investigate the
economic behavior of individuals, and their interaction in markets and other socio-economic environments.
Experiments with human participants can be designed to examine the validity of alternative theories as
well as performance and effectiveness of various solutions to economic problems.
This seminar introduces you to experimental methods,
enriches your economic intuition through participation in, and design and conduct of experiments.
The introduction part of the course
consists of a series of classroom experiments that address some classic questions, such as:
1. Are the prices and allocations of goods that
emerge in an unstructured market environment approximated by the competitive, supply and demand model?
2. What are the properties of alternative designs of auctions;
specifically, what auctions give rise to the “winner's curse?”
3. Under what conditions, and to what extent,
can stock markets be informationally efficient? When do they become susceptible to formation of price bubbles?
4. How does the problem of free riding arise in provision of public goods,
and what, if anything, can one do about it?
5. What are the conditions that lead
to information cascades or herding behavior?
Participation in and analysis of
the results of these experiments, and the relevant readings, will help you refine your understanding of
economic phenomena as well as illustrate how to design and analyze your own experiments.
During the first 3-4 weeks of the class,
while these demonstration experiments are being conducted by the instructor in the class,
the students will meet individually (or in teams of two, depending on the class size)
with the instructor to identify an interesting economic question. Most of the reading in the course
will be in connection with the experimental topic you choose. You will design, execute, analyze,
and present a written report on the results of an in-class experiment to address your chosen question.
Possible topics for the student
run experiments include (but are not limited to): competitive markets (incidence of taxes);
natural monopoly and regulation; duopoly; entry-exit-predation; auctions (second price, winners curse);
choice under uncertainty (risk aversion, "anomalies"); the effect of restrictions on trading on market volatility;
cascades and herding; public goods (mechanisms for improving provision);
multi-stage bargaining; monetary policy under uncertainty, sequential search (the labor market, the "marriage" problem);
information dissemination/aggregation; the efficiency of markets with "Zero-Intelligence" agents;
trade and comparative advantage.
Each week, students will typically
be assigned a reading, either as background on the question being addressed in the next experiment,
or as a summary of others' results. These weekly reading assignments will be modest (on the order of twenty pages).
In addition to a (team or individual)
report on their experiment, a short 10-15 page paper will be required of each individual student on a topic relating
to experimental economics. For example, the individual paper could relate your
experimental results to some real world economic phenomena, analyze a field experiment,
or critically reviewing an experiment reported on in the literature.
Two out of three courses
(Intermediate microeconomics, Intermediate macroeconomics, and Econometrics) are prerequisites for the seminar.
References
Friedman, Daniel & Sunder, Shyam, Experimental Methods:
A Primer for Economists Cambridge University Press 1994 (F&S)
Davis, Douglas & Holt, Charles, Experimental Economics,
Princeton University Press, 1993 (D&H)
Kagel, John & Roth, Alvin, Handbook of Experimental Economics, 1995 (HEE)
1.
Experimental Method
2.
Auctions
3.
Industrial Organization
4.
Corporate Finance
5.
Game Theory
6.
Bargaining
7.
Asset Markets
8.
Experimental Macroeconomics
9.
Public goods
10.
Agency and contracts
11.
Structural study of economies
using artificial agents
12.
Marketing
13.
Corporate finance
14.
Field Experiments
Guideline Questions to Think About Your Research
Experiment
I would like each member of the class to think about a research experiment you would like to do. It would be useful for you to write down answers to the following questions, and then iterate by revising your answers as you think about each question, discuss it with your colleagues and the instructor. Send me your write up at any stage you wish, and feel free to come and talk to me about it.
1. What is the question you would like to have answered after the experiment? (Your answer should be a single sentence with a question mark at the end.)
2. What do you know already about the possible answers to the question you have stated above?
3. What are the various possible ways of finding an answer to the question you have stated above? Include both experimental as well as any other methods you can think of.
4. What are the advantages and disadvantages of using an experiment to find an answer?
5. How important is this question to YOU? What are the chances that the answer you get from the experiment will surprise you or others? What are the chances that it will change someone’s mind?
6. How would you conduct the experiment? (Write down a design and instructions.)
7. Is your experimental design the simplest possible design to help answer the question you have stated?
8. What are the possible outcomes of the experiment? Do the possible outcomes include at least one outcome that will answer the question you stated above? What is the chance that you will observe this outcome?
At any stage of your thinking, feel free to go back and revise your earlier answers if you wish to.
Preliminary Schedule for Fall 2012
Session |
Subject |
Students' Material |
Demonstration/Experiment by |
Location |
|
| 1 |
Sep 4, 2012 |
Double Auctions Double Auction Demo Design and Data (Excel Workbook)
|
Instructor |
CSSSI Statlab |
|
| 2 |
Sep 11, 2012 |
Markets with Informed Participants Data from In-Class Trading (Excel Workbook)
|
Instructor |
CSSSI Statlab |
|
| 3 |
Sep 18, 2012 |
Auctions: First Price, Second Price & Common Value Auctions Data (Excel Workbook) Gode, Dhananjay K. and Shyam Sunder, “Allocative Efficiency of Markets with Zero Intelligence Traders: Market as a Partial Substitute for Individual Rationality”, The Journal of Political Economy, Vol. 101, No. 1 (February 1993), 119-137. |
Instructor |
CSSSI Statlab |
|
| 4 |
Sep 25, 2012 |
Contributions to Public Goods
Contributions to Public Goods Data (Excel Workbook)
Contributions to Public Goods with asymmetric information (Excel Workbook)
F. A. Hayek, “The
Use of Knowledge in Society”, The American Economic
Review, Vol. 35, No. 4. (Sep., 1945), pp. 519-530. |
Instructor |
CSSSI Statlab |
|
5 |
Oct 2, 2012 |
|
CSSSI Statlab |
||
6 |
Oct 9, 2012 |
Students' Experiment |
& Code) |
CSSSI Statlab |
|
7 |
Oct 16, 2012 |
Students' Experiment |
(Presentation Materials & Code) |
CSSSI Statlab |
|
8 |
Oct 23, 2012 |
Students' Experiment |
(Presentation Materials & Code) |
|
CSSSI Statlab |
9 |
Oct 30, 2012 |
Cancelled because of storm |
|
CSSSI Statlab |
|
10 |
Nov 6, 2012 |
Students' Experiment |
|
CSSSI Statlab |
|
11 |
Nov 13, 2012 |
Students' Experiment |
(Presentation Materials & Code) |
|
CSSSI Statlab |
|
Fall Recess |
||||
|
12 |
Nov 27, 2012 | Students' Experiment |
(Presentation Materials & Code) |
|
CSSSI Statlab |
|
13 |
Dec 4, 2012 | Final
Presentations |
CSSSI Statlab |
||
***When
graduate members of the class present a paper from the literature, you can
take up to 60 minutes to conduct a mini-experiment using the members of the
class as the subjects and the paper’s experiment as their design. You
should then discuss with the class (1)
the research question, (2) experimental design, (3) theoretical predictions
of experimental outcome, (4) results, and (5) your critique of the authors'
conclusions. You may also wish to suggest any improvements in the research
design, or use of alternative techniques to find a better answer to the problem.
Please discuss any help you need on the experiment with me. This experimental
mimicking will be your preparation to design and conduct your own experiment
in the later part of the seminar.
(*Priority Readings)
1.
To Protect Its Box-Office Turf, Ticketmaster Plays Rivals'
Tune, Wall Street Journal,
2.
For German Firms, New Emission Caps Roil Landscape, Wall Street Journal,
3.
Emissions Pact Stresses Developing Nations' Role, Wall Street Journal,
4.
FCC License Auction Gets Big Bids, Wall Street Journal,
5.
Possibly
first field experiment in Old Testament
1.
John H. Kagel and Alvin E.
Roth. The Handbook of Experimental Economics.
3.
Douglas D. Davis and Charles
A. Holt. Experimental Economics. Princeton University Press,
1993.
4.
Daniel Friedman and Shyam Sunder.
Experimental Methods: A Primer for Economists. Cambridge University
Press, 1994. (A how-to book on design, conduct and analysis of experiments).
5.
Daniel Friedman and John Rust.
The Double Auction Market: Institutions, Theory and Evidence.
A Proceedings Volume in the Santa Fe Institute Studies in the Sciences of
Complexity. Addison-Wesley, 1993. (Focuses on double auctions).
6.
Theodore C. Bergstrom and John
H. Miller. Experiments with Economic Principles. McGraw-Hill,
1997. (Design and conduct of classroom experiments for teaching accounting
principles).
7.
8.
Alessandra Cassar & Dan Friedman.
Economics Lab: An Intensive Course in Experimental Economics.
Routledge Advances in Experimental and Computable Economics.
9.
Charles R. Plott and Vernon L. Smith.
Handbook of Experimental Economics Results.
Vol. 1. North Holland.
1.
*Shyam Sunder, "Experimental Asset Markets:
A Survey," in The Handbook of Experimental Economics, A. Roth
and John Kagel, eds.,
2.
Forsythe, Robert, Thomas Palfrey, and C.R.
Plott, “Asset Valuation in an Experimental Market,” Econometrica
Vol. 50, pp. 537-68.
3.
*Plott, Charles R. and Shyam Sunder, “Efficiency
of Controller Security Markets with Insider Information: An Application of
Rational Expectation Models,” Journal of Political Economy, Vol.
90, No. 4 (August 1982), pp. 663-698. Text
(PDF).
4.
Plott, Charles R. and Shyam Sunder, “Rational
Expectations and the Aggregation of Diverse Information in Laboratory Security
Markets,” Econometrica, Vol. 56, No. 5 (September 1988), 1085-1118.
Reprinted in Kevin D. Hoover, ed., The Economic Legacy of Robert Lucas,
Jr. London: Edward Elger Publishing Ltd.
5.
Sunder, Shyam, “Market for Information:
Experimental Evidence,” Econometrica, Vol. 60, No. 3 (May 1992),
667-695. Abstract
(PDF), Text.(PDF).
6.
Shyam Sunder, “Why Experimental Finance?”,
International Conference on Experiments in Economic Sciences,
7.
Karim Jamai, Michael Maier, and Shyam Sunder, "Decoupling Markets and Individuals:
Rational Expectations Equilibrium Outcomes from Information Dissemination
Among Boundedly-Rational Traders", July 2012. SSRN Link.
1.
*Smith, V.L., Gerry Suchanek, and A. W. Williams,
“Bubbles, Crashes, and Endogenous Expectations in Experimental Spot
Asset Markets,” Econometrica 56(5):1119-51.
2.
Colin Camerer and Keith Wiegelt, "Information
Mirages in Experimental Asset Markets", Journal of Business, 64,
October 1991, 463-493.
3.
*Shinichi Hirota and Shyam Sunder, "Stock
Market as a ‘Beauty Contest’: Investor Beliefs and Price Bubbles
sans Dividend Anchors," November 2002. Abstract and
Text.
4.
Kagel, J.H. and Levin, D. (1986). "The Winner's Curse and Public Information in Common Value Auctions."
American Economic Review, 76, 894-920.
1.
Douglas V. DeJong, Robert Forsythe and Wilfred
C. Uecker. 1985. The Methodology of Laboratory Markets and Its Implications
for Agency Research in Accounting and Auditing. Journal of Accounting Research,
Vol. 23, No. 2, pp. 753-793.
2.
Douglas V. DeJong, Robert Forsythe, Russell
J. Lundholm and Wilfred C. Uecker. 1985. “A Laboratory Investigation
of the Moral Hazard Problem in an Agency Relationship.” Journal of
Accounting Research, Vol. 23, No. 3 (Supplement), pp. 81-120.
3.
Douglas V. DeJong, Robert Forsythe and Russell
J. Lundholm. 1985. “Ripoffs, Lemons, and Reputation Formation in Agency
Relationships: A Laboratory Market Study.” Journal of Finance,
Vol. 40, No. 3, pp. 809-820.
4.
Douglas V. DeJong and Robert Forsythe. 1992.
“A Perspective on the Use of Laboratory Market Experimentation in Auditing
Research.” The Accounting Review, Vol. 67, No. 1, pp. 157-170.
5.
Steven J. Kachelmeier and Mohamed Shehata.
1997. “Internal Auditing and Voluntary Cooperation in Firms: A Cross-Cultural
Experiment.” The Accounting Review, Vol. 72, No. 3, pp. 407-431.
6.
Steven J. Kachelmeier and Ronald R. King. 2002.
“Using Laboratory Experiments to Evaluate Accounting Policy Issues.”
Accounting Horizons, Vol. 16, No. 3, pp. 219-232.
1.
Charles A. Holt. 1995. “Industrial Organization:
A Survey of Laboratory Research,” in John Kagel, and Alvin Roth,
eds. The Handbook of Experimental Economics.” Princeton, NJ: Princeton
University Press.
2.
Coursey, Don, R. Mark Isaac, and Vernon L. Smith. 1984.
“Natural Monopoly and the Contested Markets: Some Experimental Results,”
Journal of Law and Economics. 27: 91-113.
3.
Grether, David M. and Charles R. Plott. 1984. “The
Effects of Market Practices in Oligopolistic Markets: An Experimental Examination
of the Ethyl Case.” Economic Inquiry. 24: 479-507.
4.
Miller, Ross M. and Charles R. Plott. 1985. “Product
Quality Signaling in Experimental Markets.” Econometrica. 53:
837-72.
5.
Isaac, R. Mark and Vernon L. Smith. 1985. “In Search
for Predatory Pricing,” Journal of Political Economy. 93: 320-45.
6.
Durham, Yvonne. 2000. “An Experimental Examination
of Double Marginalization and Vertical Relationships,” Journal of
Economic Behavior and Organization 42, 207-209.
7.
Chamberlin, E.H. 1948. “An Experimental Imperfect Market. ”
Journal of Political Economy. Vol 56, No. 2, 95-108.
1.
Lave. Lester. 1962. “An Empirical Approach to Prisoner’s
Dilemma.” Quarterly Journal of Economics. 76: 424-36.
2.
Banks, Jeffrey, Colin Camerer and David Porter. 1994.
“An Experimental Analysis of Nash Refinements in Experimental Games,”
Games and Economic Behavior, 6: 1-31.
3.
Brandts, Jordi, and Charles A. Holt. 1992. “An
Experimental Test of Equilibrium Dominance in Signaling Games.” American
Economic Review. 82: 1350-65.
4.
Vincent Crawford, "Theory and Experiment in the
Analysis of Strategic Interaction," in David Kreps and Ken Wallis, editors,
Advances in Economics and Econometrics: Theory and Applications, Seventh
World Congress, Vol. I, Econometric Society Monographs No. 27, Cambridge,
U.K., and New York: Cambridge University Press, 1997, 206-242; reprinted with
minor changes and additions in Colin Camerer, George Loewenstein, and Matthew
Rabin, editors, Advances in Behavioral Economics, Princeton, NJ: Princeton
University Press, 2003. (PDF).
5.
Vincent P. Crawford, "Introduction to Experimental
Game Theory" (Symposium), Journal of Economic Theory 104 (May
2002), 1-15.
6.
Goeree, J.K. and C.A. Holt. (2001). "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions."
American Economic Review 91, 1402-22.
Agent-Based Economies
Auctions
Macroeconomics and Coordination
Accounting and Agency
1.
Fouraker, Lawrence E. and Sidney Siegel. 1963.
Bargaining Behavior. New York: McGraw-Hill.
2.
Roth, Alvin. 1995. “Bargaining Experiments,”
in John Kagel, and Alvin Roth, eds. The Handbook of Experimental Economics.”
Princton, NJ: Princeton University Press.
3.
Lin, Haijin and Shyam Sunder, 2002. “Using Experimental
Data to Model Bargaining Behavior in Ultimatum Games,” in Rami
Zwick and Amnon Rapoport, eds. Experimental Business Research. Kluwer
Academic Publishers, 2002, pp. 373-97.
4.
Timothy Cason and Stanley Reynolds. 2005. “Bounded
Rationality in Laboratory Bargaining with Asymmetric Information,” Economic
Theory 25, pp. 553-574.
1.
John O. Ledyard. (1995). “Public Goods: A Survey of Experimental Research.”
in John Kagel, and Alvin Roth, eds. The Handbook of Experimental Economics.
Princton, NJ: Princeton University Press.
2.
Andreoni. 1995(a). “Cooperation in Public
Goods Experiments: Kindness or Confusion?” American Economic Review. 85: 891-904.
3.
Isaac, R.M., J.M. Walker and A.W. Williams. 1994. “Group Size and the Voluntary Provision of Public Goods:
Evidence Utilizing Large Groups. ” Journal of Public Economics. 54: 1-36.
4.
Huber, J. Martin Shubik and Shyam Sunder. 2011. “Financing of Public Goods Through Taxation
n a General Equilibrium Economy: Theory and Experimental Evidence. ” Cowles Foundation Discussion Paper. No. 1830.
SSRN Link.
Marketing
Political Science
Field Experiments