Objectif du cours
The course provides an introduction to the experimental methods used in economics to study behavior under controlled conditions. It is divided into two parts. The first part considers the rationale for experimentation in economics; it examines several of the ways in which experiments have been used; and it seeks to appraise the contribution experiments have made, and can be expected to make, in a variety of areas of economics, such as individual decision making, markets, coordination, negotiation, charitable giving, public goods games, social preferences, and lying behavior. The second part concerns experimental methods, and focuses on how to design an experiment and to analyze experimental data. Students will replicate the results of a published experiment; they will learn how to formulate their own behavioral research questions and hypotheses, and develop an experimental design for collecting and analyzing data.
The course provides graduate research training in experimental economics, and is useful either for students wishing to become academic economists or for students wishing to develop a career in a wide range of fields where knowledge of behavioral or experimental economics can prove useful, such as finance, banking, business, consulting and government. The course also promotes the following transferable skills which are essential for any graduate job: oral and written communication skills (by presenting and writing a critical review of cutting-edge work in experimental economics), critical thinking skills (by critically reading, discussing, and summarizing breakthrough work in experimental economics), analytical skills (by replicating the analysis of a top experimental paper), and research skills (by identifying a research question and designing a research experiment). Upon completion of the course, we expect students to be: • Familiar with some of the major areas of research in experimental economics; • Able to understand, critically assess and analyze experimental papers; • Able to understand some of the strengths and limitations of experiments in economics; • Able to analyze experimental data; • Able to design a simple research experiment in economics. The teaching approach is research-led. Each week, the lecture focuses on a few 'key readings' which all students should have read in advance. Students are asked to open the discussion with a brief critical summary of one of these key readings. As a part of the course assessment, each student is required to hand in a written report on a key reading, and a replication exercise (see below for more details). The assessment also includes a project concerning the design of a research experiment. Students will receive a one-to-one guidance on the project throughout the course. Finally, students will learn about the experimental methods and facilities used by the researchers at the Groupe d'Analyse et de Théorie Economique (GATE), and be invited to attend workshops and seminars in experimental economics organized by GATE.
The module assumes that students have reasonable prior working knowledge of microeconomic theory, (especially decision-making under risk and uncertainty, and game theory) macroeconomic theory, and econometrics. There are linkages between this module and Microeconomics I, Microeconomics II, and Econometrics; the game theory component Microeconomics I and II is especially useful to get the most out of this module.
Cours magistral : Fabio Galeotti
Particularly useful texts are: Camerer, C. (2003), Behavioral Game Theory: Experiments in Strategic Interaction, Princeton University Press. Kagel, J. and A. Roth, eds. (1995). The Handbook of Experimental Economics, Princeton University Press. Friedman, D. and S. Sunder (1994), Experimental Methods: A Primer for Economists, Cambridge University Press. Moffatt, P. G. (2015). Experimetrics: Econometrics for experimental economics. Macmillan International Higher Education. Siegel, S., & Castellan, N. J., Jr. (1988). Nonparametric statistics for the behavioral sciences (2nd ed.). New York, NY, England: Mcgraw-Hill Book Company.
Other useful texts include: Davis, D and C. Holt (1993), Experimental Economics, Princeton University Press. Camerer, C.F., G. Loewenstein and M. Rabin, eds. (2004), Advances in Behavioral Economics, Princeton University Press. Bardsley, N., Cubitt, R., Loomes, G., Moffat, P., Starmer, C., & Sugden, R. (2010). Experimental economics: Rethinking the rules. Princeton University Press.
Articles and Papers (bounded to change):
• Week 1: Introduction to Experimental Economics Binmore, Ken (1999) "Why Experiment in Economics?" Economic Journal, 109(453), F16-F24. Croson, Rachel and Simon Gächter (2010) "The science of experimental economics", Journal of Economic Behavior and Organization, 73, 122-131. Guala, F. (2002), "On the scope of experiments in economics: Comments on Siakantaris", Cambridge Journal of Economics, 26, 261-267. Loewenstein George (1999) "Experimental Economics From the Vantage-point of Behavioural Economics", Economic Journal, 109(453), F25-F34. Loomes, Graham (1999). "Some lessons from past experiments and some challenges for the future", The Economic Journal, 109(453), F35-F45. Plott, Charles R. (1991) "Will Economics Become an Experimental Science?" Southern Economic Journal, 57(4), 901-919. Roth, Alvin E. (1988) "Laboratory Experimentation in Economics: A Methodological Overview", Economic Journal, 98(393), 974-1031. Siakantaris, N. (2000), "Experimental economics under the microscope", Cambridge Journal of Economics, 23, 267-281. Sims, Christopher A. (2010) "But Economics Is Not an Experimental Science", Journal of Economic Perspectives, 24(2), 59-68. Smith, Vernon L. (1982) "Microeconomic Systems as an Experimental Science", American Economic Review, 72(5), 923-955. Smith, Vernon L. (1989) "Theory, Experiment and Economics", Journal of Economic Perspectives, 3(1), 151-169. Smith, Vernon L. (1994) "Economics in the Laboratory", Journal of Economic Perspectives, 8(1), 113-131. Starmer, Chris (1999) "Experimental Economics: Hard Science or Wasteful Tinkering?" Economic Journal, 109, F5-F15.
• Week 2: Choice Under Uncertainty Cubitt, Robin, Chris Starmer and Robert Sugden (1998) "On the validity of the random lottery incentive system", Experimental Economics, 1, 115-131. Grether, David M. and Charles R. Plott (1979) "Economic theory and the preference reversal phenomenon", American Economic Review 69 (1979), 623-638. Hey, John and Chris Orme (1994) "Investigating generalisations of expected utility theory using experimental data", Econometrica, 62, 1291-1326 Kahneman, Daniel and Amos Tversky (1979) "Prospect theory: an analysis of decision under risk", Econometrica, 47, 263-291 Starmer, Chris (2000) "Developments in non-expected utility theory: the hunt for a descriptive theory of choice under risk", Journal of Economic Literature, 38, pp. 332-382. Starmer, Chris and Robert Sugden (1993) "Testing for juxtaposition and event-splitting effects", Journal of Risk and Uncertainty, 2, 235-254. Sugden, Robert and Chris Starmer (1989) "Probability and juxtaposition effects: an experimental investigation of the common ratio effect", Journal of Risk and Uncertainty 2, 159-178 Tversky, Amos and Daniel Kahneman (1992) "Advances in prospect theory: cumulative representation of uncertainty", Journal of Risk and Uncertainty, 5, 297-323.
• Week 3: Contingent Valuation Bateman, Ian, Alistair Munro, Bruce Rhodes and Robert Sugden (1997) "A test of the theory of reference-dependent preferences". Quarterly Journal of Economics, 112, 479-505. Horowitz, John K., and Kenneth E. McConnell (2002) "A Review of WTA/WTP Studies." Journal of Environmental Economics and Management, 44, 426–447. Kahneman, Daniel, Jack Knetsch and Richard Thaler (1990) "Experimental tests of the endowment effect and the Coase Theorem". Journal of Political Economy, 98, 1325-1348. Shogren, Jason, Seung Shin, Dermot Hayes and James Kliebenstein (1994). "Resolving differences in willingness to pay and willingness to accept". American Economic Review 84, 255-270.
• Week 4: Market Experiments Chamberlin, Edward H. (1948) "An Experimental Imperfect Market", Journal of Political Economy, 56(2), 95-108. Smith, Vernon L. (1962) "An Experimental Study of Competitive Market Behavior", Journal of Political Economy, 70(2), 111-137. Smith, Vernon L. (1976) "Experimental Economics: Induced Value Theory", American Economic Review: Papers & Proceedings, 66(2), 274-279. Lei, Vivian, Noussair, Charles .N. and Charles R. Plott (2001), "Nonspeculative bubbles in experimental asset markets: Lack of common knowledge of rationality vs. actual irrationality", Econometrica, vol. 69, pp. 831-859. Kirchler, Michael, Jürgen Huber and Thomas Stöckl (2012) "Thar She Bursts: Reducing Confusion Reduces Bubbles", American Economic Review, 102(2), 865-883. Smith, Vernon L., Gerry Suchanek and Arlington W. Williams (1988) "Bubbles, Crashed, and Endogenous Expectations in Experimental Spot Asset Markets", Econometrica, 56(5), 1119-1151.
• Week 5: Social Preferences Berg, Joyce, John Dickhaut and Keven McCabe (1995) "Trust, Reciprocity and Social History", Games and Economic Behavior, 10, 122-142. Bolton, Gary E. and Axel Ockenfels (2000) "ERC: A Theory of Equity, Reciprocity, and Competition", American Economic Review, 90(1), 166-193. Camerer, Colin and Richard H. Thaler (1995) "Anomalies: Ultimatums, Dictators and Manners", Journal of Economic Perspectives, 9(2), 209-219. Charness, Gary and Matthew Rabin (2002) "Understanding Social Preferences with Simple Tests", Quarterly Journal of Economics, 117(3), 817-869. Chen, Yan and Sherry Xin Li (2009) "Group Identity and Social Preferences", American Economic Review, 99(1), 431-457. Cox, James C. (2004) "How to identify trust and reciprocity", Games and Economic Behavior, 46, 260-281. Eckel Catherine C. and Philip J. Grossman (1996) "Altruism in Anonymous Dictator Games", Games and Economic Behavior, 16, 181-191. Engelmann, Dirk and Martin Strobel (2004) "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments", American Economic Review, 94(4), 857-869. Fehr, Ernst and Klaus M. Schmidt (1999) "A Theory of Fairness, Competition and Cooperation", Quarterly Journal of Economics, 114(3), 817-868. Fehr, Ernst and Urs Fischbacher (2002) "Why Social Preferences Matter – The Impact of non-Selfish Motives on Competition, Cooperation and Incentives", Economic Journal, 112(478), C1-C33. Forsythe, Robert, Joel L. Horowitz, N.E. Savin and Martin Sefton (1994) "Fairness in Simple Bargaining Experiments", Games and Economic Behavior, 6, 347-369. Güth, Werner, Rolf Schmittberger and Bernd Schwarz (1982) "An Experimental Analysis of Ultimatum Bargaining", Journal of Economic Behavior and Organization, 3, 367-388. Güth, Werner and Martin G. Kocher (2014) "More than thirty years of ultimatum bargaining experiments: motives, variations, and a survey of the recent literature", Journal of Economic Behavior and Organization, 108, 396-409. Hoffman, Elizabeth, Keven McCabe and Vernon L. Smith (1996) "Social Distance and OtherRegarding Behavior in Dictator Games", American Economic Review, 86(3), 653-660. Rabin, Matthew (1993) "Incorporating Fairness into Game Theory and Economics", American Economic Review, 83(5), 1281-1302. Sobel, Joel (2005). Interdependent preferences and reciprocity. Journal of economic literature, 43(2), 392-436.
• Week 6: Social and Moral Dilemmas Abeler, J., Nosenzo, D., & Raymond, C. (forthcoming), "Preferences for truth-telling", Econometrica. Andreoni, James (1988) "Why Free Ride? Strategies and Learning in Public Goods Experiments", Journal of Public Economics, 37, 291-304. Andreoni, James (1995) "Cooperation in Public-Goods Experiments: Kindness or Confusion?", American Economic Review, 85(4), 891-904. Andreoni, James (1995) "Warm-Glow Versus Cold-Prickle: The Effects of Positive and Negative Framing on Cooperation in Experiments", Quarterly Journal of Economics, 110(1), 1-21. Chaudhuri, Ananish (2011) "Sustaining cooperation in laboratory public goods experiments: a selective survey of the literature", Experimental Economics, 14, 47-83. Fehr, Ernst and Simon Gächter (2000) "Cooperation and Punishment in Public Goods Experiments", American Economic Review, 90(4), 980-994. Fischbacher, U., & Föllmi-Heusi, F. (2013). Lies in disguise—an experimental study on cheating. Journal of the European Economic Association, 11(3), 525-547. Gneezy, Uri. 2005. "Deception: The Role of Consequences." American Economic Review, 95 (1): 384-394. Gneezy, Uri, Agne Kajackaite, and Joel Sobel (2018) "Lying Aversion and the Size of the Lie", American Economic Review, 108(2), 419-53. Hermann, Benedikt, Christian Thöni and Simon Gächter (2008) "Antisocial Punishment Across Societies", Science, 319, 1362-1367. Sefton, Martin, Robert Shupp and James M. Walker (2007) "The Effect of Rewards and Sanctions in Provision of Public Goods", Economic Inquiry, 45(4), 671-690. • Weeks 7 and 8: Experimental Methods and Experimetrics Abeler, Johannes, and Daniele Nosenzo (2015), "Self-selection into laboratory experiments: pro-social motives versus monetary incentives", Experimental Economics, 18, 195-214. Alekseev, Aleksandr, Gary Charness, and Uri Gneezy (2017) "Experimental methods: When and why contextual instructions are important", Journal of Economic Behavior & Organization, 134, 48-59. Brandts, Jordi, and Gary Charness (2011) "The strategy versus the direct-response method: a first survey of experimental comparisons", Experimental Economics 14, 375-398. Casari, Marco (2005), "On the design of peer punishment experiments", Experimental Economics, 8, 107-115. Charness, Gary, Uri Gneezy, and Brianna Halladay (2016) "Experimental methods: Pay one or pay all", Journal of Economic Behavior & Organization, 131, 141-150. Charness, Gary, Uri Gneezy, and Austin Henderson (2018) "Experimental methods: Measuring effort in economics experiments", Journal of Economic Behavior & Organization 149, 74-87. Charness, Gary, Uri Gneezy, and Alex Imas (2013) "Experimental methods: Eliciting risk preferences", Journal of Economic Behavior & Organization, 87, 43-51. Charness, Gary, Uri Gneezy, and Michael A. Kuhn (2013) "Experimental methods: Extra-laboratory experiments-extending the reach of experimental economics", Journal of Economic Behavior & Organization, 91, 93-100. Charness, Gary, Uri Gneezy, and Michael A. Kuhn (2012) "Experimental methods: Between-subject and within-subject design", Journal of Economic Behavior & Organization 81, 1-8. Chen, Yan, and Joseph Konstan (2015), "Online field experiments: a selective survey of methods", Journal of the Economic Science Association, 1, 29-42. Cleave, Blair L., Nikos Nikiforakis, and Robert Slonim (2013) "Is there selection bias in laboratory experiments? The case of social and risk preferences", Experimental Economics, 16, 372-382. Fréchette, Guillaume R. (2012) "Session-Effects in the Laboratory", Experimental Economics, 15(3): 485-498 Fréchette, Guillaume R. and Andrew Schotter (editors), Handbook of Experimental Economic Methodology, Oxford University Press, February 2015 Harrison, Glenn W., and John A. List (2004) "Field experiments", Journal of Economic literature 42, 1009-1055. Harrison, Glenn W., Ronald M. Harstad, and E. Elisabet Rutström (2004), "Experimental methods and elicitation of values", Experimental economics, 7, 123-140. Horton, John J., David G. Rand, and Richard J. Zeckhauser (2011), "The online laboratory: Conducting experiments in a real labor market", Experimental economics, 14, 399-425. Kachelmeier, Steven J., and Kristy L. Towry (2005) "The Limitations of Experimental Design: A Case Study Involving Monetary Incentive Effects in Laboratory Markets", Experimental Economics, 8, 21-33. List, John A., Sally Sadoff, and Mathis Wagner (2011) "So you want to run an experiment, now what? Some simple rules of thumb for optimal experimental design" Experimental Economics, 14, 439. Moffatt, Peter G., and Simon A. Peters (2001), "Testing for the presence of a tremble in economic experiments", Experimental Economics 4, 221-228. Roux, Catherine, and Christian Thöni (2015) "Do control questions influence behavior in experiments?" Experimental Economics, 18, 185-194. Sitzia, Stefania and Robert Sugden (2011) "Implementing theoretical models in the laboratory, and what this can and cannot achieve", Journal of Economic Methodology, 18, 323-343. Schlag, Karl H., James Tremewan, and Joël J. Van der Weele (2015) "A penny for your thoughts: A survey of methods for eliciting beliefs", Experimental Economics 18, 457-490. Smith, Vernon L. (2002), "Method in experiment: Rhetoric and reality", Experimental economics 5, 91-110. Zizzo, Daniel (2010) "Experimenter demand effects in economic experiments", Experimental Economics, 13, 75-98. Zizzo, Daniel (2013) "Claims and Confounds in Economic Experiments", Journal of Economic Behavior and Organization, 93(1), 186-195.