The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Experimental Methods in Economics

  • C. F. Bastable
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_228

Abstract

In the mid-20th century economists became involved in the design and conduct of laboratory experiments to examine propositions implied by economic theory. This development brought new standards of rigour to the data gathering process. This article gives an account of the author’s experiment in 1956 to test the hypothesis that the competitive market process yields welfare improving (and, under certain limiting ideal conditions, welfare maximizing) outcomes, provides an interpretive history of the development of experimental economics, discusses the functions of market experiments in microeconomic analysis, and classifies the application of experimental methods.

Keywords

Agenda processes Antitrust economics Auctions (theory) Buyer’s surplus Collusion Compensated unanimity processes Competitive equilibrium Contestable markets hypothesis Decentralization Demand Functions Dominance Double oral auction Expected utility theory Experimental methods in economics Hypotheses Incentive compatibility Industrial organization Institutions Labour supply Market as positive sum game Monopoly Monopsony Natural monopoly Non-satiation Parallelism Preference theory Privacy Public enforcement of law Public good allocation Research programmes Saliency Scale economics seller’s surplus Smith, A. Smith, V. L. Speculative gains Supply functions Testing Vickrey, W. Vouchers 
This is a preview of subscription content, log in to check access

Bibliography

  1. Battalio, R., J. Kagel, R. Winkler, E. Fisher, R. Basmann, and L. Krasner. 1973. A test of consumer demand theory using observations of individual consumer purchases. Western Economic Journal 11: 411–428.Google Scholar
  2. Chamberlin, E. 1948. An experimental imperfect market. Journal of Political Economy 56: 95–108.CrossRefGoogle Scholar
  3. Coursey, D., and V. Smith. 1985. Experimental tests of an allocation mechanism for private, public or externality goods. Scandinavian Journal of Economics 86: 468–484.CrossRefGoogle Scholar
  4. Coursey, D., M. Isaac, M. Luke, and V. Smith. 1984. Market contestability in the presence of sunk (entry) costs. RAND Journal of Economics 15 (1): 69–84.CrossRefGoogle Scholar
  5. Friedman, J. 1963. Individual behavior in oligopolistic markets: An experimental study. Yale Economic Essays 3: 359–417.Google Scholar
  6. Friedman, D. 1984. On the efficiency of experimental double auction markets. American Economic Review 74: 60–72.Google Scholar
  7. Hoggatt, A. 1959. An experimental business game. Behavioral Science 4 (3): 192–203.CrossRefGoogle Scholar
  8. Kagel, J., R. Battalio, H. Rachlin, L. Green, R. Basmann, and W. Klemm. 1975. Experimental studies of consumer behavior using laboratory animals. Economic Inquiry 13 (1): 22–38.CrossRefGoogle Scholar
  9. Ketcham, J., V. Smith, and A. Williams. 1984. A comparison of posted-offer and double-auction pricing institutions. Review of Economic Studies 51: 595–614.CrossRefGoogle Scholar
  10. Lakatos, I. 1978. In The methodology of scientific research programmes, philosophical papers, ed. J. Worrall and G. Currie, vol. 1. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  11. Mosteller, F., and P. Nogee. 1951. An experimental measurement of utility. Journal of Political Economy 59: 371–404.CrossRefGoogle Scholar
  12. Plott, C. 1982. Industrial organization theory and experimental economics. Journal of Economic Literature 20: 1485–1527.Google Scholar
  13. Sauermann, H., and R. Selten. 1959. Ein Oligopolexperiment. Zeitschrift für die Gesamte Staatswissenschaft 115: 427–471.Google Scholar
  14. Shubik, M. 1962. Some experimental non zero sum games with lack of information about the rules. Management Science 81: 215–234.CrossRefGoogle Scholar
  15. Siegel, S., and L. Fouraker. 1960. Bargaining and group decision making. New York: McGraw-Hill.Google Scholar
  16. Smith, V. 1962. An experimental study of competitive market behavior. Journal of Political Economy 70: 111–137.CrossRefGoogle Scholar
  17. Smith, V. 1982. Microeconomic systems as experimental science. American Economic Review 72: 923–955.Google Scholar
  18. Smith, V., A. Williams, K. Bratton, and M. Vannoni. 1982. Competitive market institutions: Double auctions versus sealed bid-offer auctions. American EconomicReview 72: 58–77.Google Scholar
  19. Williams, A., and Smith, V. 1984. Cyclical double-auction markets with and without speculators. Journal of Business 57(1) Pt 1, 1–33.Google Scholar
  20. Wilson, R. (1984, August). Multilateral exchange (Working paper No. 7). Stanford: Stanford University.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • C. F. Bastable
    • 1
  1. 1.