Talk:Experimental economics

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Behavioural biases in auctions[edit]

Other experiments went further into the auction experiments with which Smith had begun the discipline. He showed that a naive crowd tends to pay more for any item when it sold via an (increasing price) English auction, rather than a (declining price) Dutch auction.

One explanation of this bias is that a declining price generates a sense of "suspense", whereas an increasing price tends to give the ultimate victor in a bidding war an extra sense of satisfaction. Therefore, the social pressure not to lose may add an extra utility to winning beyond that of the item purchased. Another explanation is the idea in a common value auction that seeing other people bid for the same thing increases its probable value. (See: Classroom experiment example of Dutch auction under-valuation.)

Yet another explanation is that the optimal bidding rule is more transparent in an English Auction than in a Dutch Auction. In an English Auction (for a single unit of a good) the optimal bidding strategy is to continue raising one's bid until doing so would result in a price that exceeded one's value for the unit. (Given infinitely small bidding increments this results in a unit price equal to the second highest value among the bidders.) In a Dutch Auction the optimal bidding strategy is to allow the bid price to fall to a precise fraction of one's value. The fraction is (N-1)/N, where N is the number of bidders in the auction. Naive bidders (and even many experienced bidders) are unlikely to know this bidding strategy, and may therefore allow the price to fall "too low" before purchasing.

I'm not sure this belongs here. I might be alright with restoring it, or moving it to Dutch auction, minus the "naive" comments. But the argument doesn't seem quite right. Suppose you and I are bidding on something we both value at $100. Therefore, according to the above (N=2), you wait for $50. But I accept at $75. How was your strategy optimal? Certainly it's not an equilibrium strategy. 192.75.48.150 17:54, 29 June 2006 (UTC)[reply]

I think (N-1)/N applies when valuations are independently and identically distributed across bidders and are draws from a uniform distribution from 0 to some upper value.

I believe that the "social preferences" section should include a note about prospect theory as a certain degree of the experimental findings in this field are regarding welfare changes in respect to others Canking (talk) 17:55, 27 January 2008 (UTC)[reply]

Article desperately needs explanation/links for "Pareto"[edit]

I have heard of the Pareto Principle (80/20 rule), but the other things in this article which have Pareto's name attached to them are obviously meant to refer to much more specific ideas and procedures. What do they mean? --Jonrock (talk) 18:39, 1 April 2008 (UTC)[reply]

Linked to Pareto efficiency Cretog8 (talk) 04:22, 23 May 2008 (UTC)[reply]

Strange Wilson video[edit]

Up at the top, as a reference to "which emerged in the 1990's" (very arguable, but beside the point at the moment), there's a link to the video [1]. While I've only watched about a minute of the video, it seems to be a philosophy / enlightenment / theology talk. If it leads to a point on experimental economics, I still think it's too tangential to be right up top.Cretog8 (talk) 22:57, 15 April 2008 (UTC)[reply]

removed it Cretog8 (talk) 04:04, 23 May 2008 (UTC)[reply]

Emerged in 1990's?[edit]

Experimental economics long predates the 90's, although I suppose that's when it exploded. Need to figure out a better way to handle this, perhaps a brief history. Cretog8 (talk) 04:06, 23 May 2008 (UTC)[reply]

Experimental topics[edit]

This section looks too deep and narrow. Trying to cram in a lot of the content of learning experiments, for example, when that's just one area. Not sure how it should be organized, but should probably aim for broader and shallower? Cretog8 (talk) 04:19, 23 May 2008 (UTC)[reply]

Debates within field[edit]

Deception: Some argument about whether deception is really all that bad. In any case, the problem with deception is not so much a matter of the experiment in which it is used. It's more a matter of "polluting the well"; subjects who have been deceived in one experiment are likely to be subjects in future experiments and distrust the instructions, which kills salience.
Neutral context: The standard has become providing context-free instructions (referring to a product as "A", rather than as "fish", for instance). It's been argued that providing a context can be beneficial, that the salience lost to framing effects is often much smaller than that gained by better understanding.
Field experiments: This needs a section of its own. In any case, argument about how much applicability of results gets lost when moved into lab.

Cretog8 (talk) 13:10, 23 May 2008 (UTC)[reply]

Link to Neuroeconomics[edit]

Neuroeconomics is its own discipline, but tied tightly to experimental economics. Cretog8 (talk) 13:53, 23 May 2008 (UTC)[reply]

high importance[edit]

I just re-ranked this from Low to High importance. I may be biased, because this is my field. Within the profession, experimental economics has come into its own as a respected field, and so any economist should be familiar with it. For layfolk, many of the details aren't important, but knowing that economics has an experimental component is worthwhile. Plus, (for good or ill) this field generates a lot of news with results that the media finds nifty, so lots of people are going to have heard about it (although maybe not the phrase "experimental economics") and should be able to come find out more.

As I say, I may be biased, so I put this comment here to attract the attention of any who disagree. CRETOG8(t/c) 04:19, 19 August 2008 (UTC)[reply]

software[edit]

I don't think the software section belongs in this article. The article isn't primarily for people who want to start practicing experimental economics soon, so the reader won't generally need that. Besides, it's messy and seems to invite spam.

I intend to cut it out. If others think it's important enough to be on WP, then it should be its own article. CRETOG8(t/c) 23:54, 4 October 2008 (UTC)[reply]

Faulty assumptions[edit]

Experimental economics takes as given--as 'natural'--a particular understanding of individual behavior that should instead be regarded as constructed, or at least, historically contingent. Why should one believe in (take as given) the behavioral assumptions attributed to human individuals by experimental economics instead of regarding them as constructed and/or amplified or reinforced by the particular historically contingent contexts and institutions within which the individual is located? —Preceding unsigned comment added by 99.186.245.142 (talk) 07:18, 7 June 2009 (UTC)[reply]

Comments[edit]

An ill-advised edit to the WikiProject Economics template invited the creation of a separate “Comments” page with its own Talk page. That page is almost surely going to be deleted. Below is a comment from that separate Talk page. —SlamDiego_←T 14:09, 7 June 2009 (UTC)[reply]

This page needs to engage with critiques of the ontological and epistemological presuppositions of experimental economics. For example, experimental economics takes as given--as 'natural'--a particular understanding of individual behavior that should instead be regarded as constructed, or at least, historically contingent. Why should one believe in (take as given) the behavioral assumptions attributed to human individuals by experimental economics instead of regarding them as constructed and/or amplified or reinforced by the particular historically contingent contexts and institutions within which the individual is located? Using experimentation to verify presupposition doesn't prove that the essence of individual economic agents coheres to the presuppositions held by the experimenter. There is an element of circularity here. The institutional context within which individual economic agents exist shapes individual behavior. This behavior cannot be assumed to represent the essence of individuals (homo economicus) without rigorous comparison across varying (historical and cultural) institutional contexts across space and time. —Preceding unsigned comment added by 99.186.245.142 (talk • contribs)

This might be right, except for the jargon --Pgreenfinch (talk) 17:46, 7 June 2009 (UTC)[reply]

As I've noted elsewhere, Wikipedia is simply not a place for the active reform of economics. —SlamDiego_←T 15:49, 8 June 2009 (UTC)[reply]

Teaching materials[edit]

Some UK academics are sharing open courseware for experimental economics at [2], [3] and [4] . I'm personally involved with the project so it would be a WP:COI for me to use them in this article. However, I recommend the files to this article's editors, to consider as external links or even as sources. The syllabi (last link) may be a helpful guide to the structure of this article. MartinPoulter (talk) 11:12, 27 August 2010 (UTC)[reply]

...Derived from co-operation; it is well established on the self-interest makings. My thought and further experiment towards the experience in a nations culture will involve the making of "the-to-know process, where individuals can evaluate the expenditures of an economy from a telivsed experience. Again I'm showing a never ever thought perhaps, pertaining to the future, in balance. Till next time. I will eventially refine this statement from self evaluation. My current last posting was at incentive; my incentive was dealing with a tax incentive.David George DeLancey (talk) 14:47, 11 April 2011 (UTC)[reply]

Why that pic at the top-right?[edit]

It is an interesting page; however, I have found ata least two weaknesses: -it is too short (it is like to try to some up the divine comedy in one page -why there is that pic at the top right? It is about GDP (PPP) of different countries — Preceding unsigned comment added by 77.105.197.123 (talk) 09:58, 6 June 2012 (UTC)[reply]

Dr. Villeval's comment on this article[edit]

Dr. Villeval has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

It is important to mention that experimental methods are often used to test
new theoretical models developed in behavioral economics.
An important topic has been ignored in the article: the analysis of incentives. Many experiments have been developed in the field of labor, showing how motivation reacts to the manipulation of intrinsic and extrinsic incentives.
The section on critiques could be improved. The main critic adressed to experimental economics is not about internal validity but about external validity. There is generally consensus on the generalizability of experimental qualitative findings but less agreement on the ability of this method to provide point predictions. See the recent Handbook on Experimetnal Economic Methodology edited by Frechette and Schotter (2015), Oxford University Press.
Another software can be used to invite subjects to participate in experiments : HRoot (Bock, Olaf, Ingmar Baetge & Andreas Nicklisch (2014). hroot – Hamburg registration and organization online tool. European Economic Review 71, 117-120).

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Reference 1: Zhixin Dai & Robin M. Hogarth & Marie Claire Villeval, 2014. "Ambiguity on audits and cooperation in a public goods game," Working Papers halshs-00944500, HAL.

Reference 2: Mathieu Lefebvre & Pierre Pestieau & Arno Riedl & Marie-Claire Villeval, 2011. "Tax Evasion, Welfare Fraud, and the Broken Windows Effect : An Experiment in Belgium, France and the Netherlands," Working Papers 1116, Groupe d'Analyse et de Theorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Universite Lyon 2, Ecole Normale Superieure.

ExpertIdeas (talk) 03:02, 25 August 2015 (UTC)[reply]

Dr. Ortmann's comment on this article[edit]

Dr. Ortmann has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This is a very partisan account of EE. I think it would be very interesting to see who has written it/contributed to it. I certainly would have relied on some other sources (Roth's histories of EE, Svorencik & Maas on their witness workshop, etc.) Parts of the entry are used to advertize work and support dubious judgement calls (e.g., look at the two concluding sentences of the Coordination games section where a paper is cited that has since its publication in 2010 garnered all of 23 cites.) In contrast, the considerable insights that we have gained (and that have been summarized in at least one survey) are not mentioned. There is also important and related work on deductive and inductive selection principles not mentioned here. The section on learning is also a hodgepodge that is little but some name-dropping. Dito for the social preferences section. I mean it is not that we do not have some pretty good surveys for that (e.g., Cooper and Kagel,forever forthcoming).

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Dr. Ortmann has published scholarly research which seems to be relevant to this Wikipedia article:

Reference 1: Ortmann, Andreas. "Episodes from the Early History of Experimentation in Economics." The Making of Experimental Economics. Springer International Publishing, 2016. 195-217.

Reference 2: Ortmann, Andreas, and Ralph Hertwig. "The costs of deception: Evidence from psychology." Experimental Economics 5.2 (2002): 111-131.

Reference 3: Ortmann, Andreas. "Charles R. Plott’s collected papers on the experimental foundations of economic and political science." Journal of Economic Psychology 24.4 (2003): 555-575.

ExpertIdeasBot (talk) 14:37, 19 May 2016 (UTC)[reply]

Dr. Salmon's comment on this article[edit]

Dr. Salmon has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

In the section on learning experiments, the main problem with EWA is that the parameters are not identified. This is discussed in Salmon (2001, Econometrica) and Wilcox (2006, Econometrica). The last paragraph is very odd talking about "recent" work. All of those papers are 10-15 years old.
Agent based computational modeling has basically no connection to the rest of the article. Should be eliminated. Methodology guidelines: Ok, except for the last one. Many many experiments these days involve introducing specific context. The context free approach is an older notion. The accurate way to put it is that experimenters use contextual information in a careful way in an attempt to determine how individuals respond to contextual cues and information.
The critique section is awful. Vesterlund and Kessler has an excellent take on this issue and Schram (2005, Journal economic methodology) is more comprehensive.

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Reference 1: Chang, Wei-Shiun & Salmon, Timothy C. & Saral, Krista Jabs, 2013. "Procurement Auctions with Renegotiation and Wealth Constraints," MPRA Paper 50137, University Library of Munich, Germany.

Reference 2: Timothy C. Salmon & Roberto A. Weber, 2011. "Maintaining efficiency while integrating entrants from lower-performing groups: an experimental study," ECON - Working Papers 035, Department of Economics - University of Zurich, revised Jul 2014.

ExpertIdeasBot (talk) 15:45, 19 May 2016 (UTC)[reply]

Dr. Cooper's comment on this article[edit]

Dr. Cooper has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Coordination Games: Some of the best early papers on coordination games are due to Cooper, DeJong, Forsythe, and Ross. Among their many contributions, they demonstrated the critical role communication can play in helping individuals to coordinate on efficient outcomes.
Fundamental contributions to the study of coordination games were made by Ray Battalio and John Van Huyck. In a ground breaking set of papers from the early 1990s, they introduced a number of games which are widely studied today. Most important among these is the minimum game or weak-link game. These games capture the idea that productivity in many settings is determined by the "weak link", the person who exerts the least effort. There is a natural tendency for play to collapse to an inefficient outcome with minimal effort exerted by all. A large literature has studied how to escape the resulting productivity trap.
Learning: The article doesn't quite have correct what John and I did. In our early papers, what John Kagel and I showed was that learning models did a better job of explaining behavior in signaling games than equilibrium analysis. Our work was foreshadowed by Brandts and Holt's path-breaking work on signaling games. We later worked on studying transfer, the question of whether individuals could take what had been learned in one game and apply it in another related game. One of our main finding was that two-person teams are far more capable of transfer than individuals.

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Reference : Cooper, David J. & Kuhn, Kai-Uwe, 2009. "Communication, Renegotiation, and the Scope for Collusion," CEPR Discussion Papers 7563, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 15:57, 19 May 2016 (UTC)[reply]

Dr. Ruffle's comment on this article[edit]

Dr. Ruffle has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

- a very superficial introduction to Experimental Economics
- skewed toward market experiments and learning - drop the entire section on Agent-based computational modeling --> it does not belong here - The "Critiques" section is unintelligible
- a major rewrite is needed

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Reference 1: Bradley J. Ruffle, Oscar Volij, 2014. "First-Mover Advantage in Best-Of-Series: An Experiment Comparison of Role-Assignment Rules," LCERPA Working Papers 0081, Laurier Centre for Economic Research and Policy Analysis, revised 30 Sep 2014.

Reference 2: Bradley J. Ruffle & Zeev Shtudiner, 2010. "Are Good-Looking People More Employable?," Working Papers 1006, Ben-Gurion University of the Negev, Department of Economics.

ExpertIdeasBot (talk) 15:59, 19 May 2016 (UTC)[reply]

Dr. Duffy's comment on this article[edit]

Dr. Duffy has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Organization of economic topics should follow initial outline of topics at top of page. Poorly written sentences: "Under some conditions at least groups of experimental subjects can coordinate even complex non-obvious asymmetric Pareto-best equilibria,This is even though all subjects decide simultaneously and independently without communication. The way by which this happens is not yet fully understood" Instead suggest: "Under certain conditions, experimental subjects can learn to coordinate on the Pareto-best equilibrium, while under other conditions, they coordinate on an inefficient equilibrium, an outcome known as a "coordination failure". The precise means by which subjects achieve coordination and select from among multiple equilibrium possibilities is an ongoing topic of research" The reference in footnote 7 is not specific to this statement and should be changed to G. Devetag and A. Ortmann "When and why? A critical survey on coordination failure in the laboratory" Experimental Economics 2007.10, Issue 3, pp 331-344

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Reference : John Duffy & Dietmar Fehr, 2014. "Equilibrium Selection in Similar Repeated Games: Experimental Evidence on the Role of Precedents," Working Papers 141505, University of California-Irvine, Department of Economics.

ExpertIdeasBot (talk) 16:55, 19 May 2016 (UTC)[reply]

Dr. Cabrales's comment on this article[edit]

Dr. Cabrales has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

It is generally fine, but the classification in topics is a bit outdated (evolutionary game theory stands out) and it is a taxonomy that lumps together things without an organizing principle.

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Reference : Antonio Cabrales & Gary Charness & Marie-Claire Villeval, 2011. "Hidden Information, Bargaining Power, And Efficiency: An Experiment," Post-Print halshs-00614472, HAL.

ExpertIdeasBot (talk) 10:58, 28 May 2016 (UTC)[reply]

Dr. Davis's comment on this article[edit]

Dr. Davis has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

1) Opening paragraph, 3rd sentence. I do not believe that it is generically the case that cash incentives are offered to mimic real world incentives. Peraps the following would be better
To help make decisions salient economic experiments usually use cash to motivate subjects.
2) Opening paragraph 4th sentence. It would be well to indicate at the outset that experiments involve individual decisions, since that is such a prominent focus of current investigation. You might try
"Experiments are used to help understand both individual allocative decisions, as well as how and why markets and other exchange systems function as they do."
3) Opening paragraph, last sentence. One of the most important contributions of using experimental methods in economics has been the dialogue it has fostered with psychology. It might be well to mention this in the opening. Something like the following might be useful in lieu of the last sentence.
The use of experimental methods in economics has led to interdisciplinary work in an number of areas, including political science, law[2] and psychology
4) In the section on market economics, it might be well to allude to the way incentives are induced. Also, one of the most prominent early lessons was that 'institutions matter' You might address these by replacing the sentece starting after note 8, with the following

Smith studied the behavior of "buyers" and "sellers", whose value and cost incentives for a fictitious commodity were induced in a way that allowed the specification of demand and supply curves. Participants were asked to competitively "bid" or "ask" for units of this commodity following the rules of various real world market institutions (e.g., the double auction institution used in many financial exchanges and the posted offer institution that characterizes much retail exchange).
Then in that paragraph add the following sentence
Institutions, however, importantly affect performance. For example, markets conducted underr posted offer rules converge both less rapidly and often less completely to competitive predictions than do double auction markets.
5) Experimental finance section. - The first sentence is unclear. Try something like
"Experimental finance studies financial markets with the goals of understanding how different market institutions and environments affect prcing, trade flows and information aggregation and diffusion."
Second sentence. It is not true that researchers us simulation software to conduct this research. It is true that most financial market experiments are computerized, but they do not involve simulation software.
- The second paragraph doesn't really get at the central point of financial trading bubbles. Asymmetric information is not an important part of the story. You might substitute with something like
One important application of experiments in finance examines the propensity for traders of a long lived asset to generate speculative pricing bubbles. Following a seminal paper in the late 1980's (Smith, Suchanek and Williams), financial economists have found than market prices trend above the asset's underlying fundamental value in a robust variety of circumstances, providing evidence that calls into question the efficient markets hypothesis.

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Dr. Davis has published scholarly research which seems to be relevant to this Wikipedia article:

Reference 1: Douglas Davis & Asen Ivanov & Oleg Korenok, 2014. "Aspects of Behavior in Repeated Games: An Experimental Study," Working Papers 727, Queen Mary University of London, School of Economics and Finance.

Reference 2: Douglas D. Davis & Korenok Oleg & Edward S. Prescott, 2011. "An Experimental Analysis of Contingent Capital with Market-Price Triggers," Working Papers 1102, VCU School of Business, Department of Economics, revised Apr 2013.

Reference 3: Douglas D. Davis & Korenok Oleg, 2010. "Nominal Price Shocks in Monopolistically Competitive Markets: An Experimental Analysis," Working Papers 1003, VCU School of Business, Department of Economics, revised Jun 2011.

ExpertIdeasBot (talk) 12:09, 2 June 2016 (UTC)[reply]

Dr. Cadsby's comment on this article[edit]

Dr. Cadsby has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Finance
Experimental finance studies financial markets with the goals of establishing different market settings and environments to observe experimentally and analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanism and returns processes. Presently, researchers use simulation software to conduct their research.
For instance, experiments have manipulated information asymmetry about the holding value of a bond or a share on the pricing for those who don't have enough information, in order to study stock market bubbles.
The article should be talking about the use of the experimental economics methodology in Finance rather than the use of simulation software, which has little to do with experimental economics. For example, the paragraphs above could be replaced with:
In Investment and Corporate Finance, the methods of experimental economics have been used to study such topics as agency problems, the interaction of risk and information choices, asset pricing theories, financing and dividend decisions in the presence of asymmetric information between managers and investors and game-theoretic models of corporate takeovers. Cadsby and Maynes (1998) provide a survey of the early literature in this field. A more recent paper uses experimental methods to examine the Modigliani-Miller Theorem in the lab (Charness and Neugebauer, 2015).
Cadsby, C. B and Maynes, E. (1998) Laboratory experiments in corporate and investment finance: a survey. Managerial and decision economics. vol:19 iss:4‐5, 277-298.
Charness, G. and Neugebauer, T. (2015) A test of the Modigliani-Miller invariance theorem and arbitrage in experimental asset markets. www.cesifo-group.de.

The entry on Agent-based computational modeling does not belong under experimental economics. Sections could be devoted instead to the use of experimental economics in Accounting and Management. In Accounting, there is work by Steven Kachelmeier and Mohamed Shehata as well as work by James Alm and colleagues on tax evasion. In Management, see many articles by J. Keith Murnighan and colleagues as well as Cadsby, Song and Tapon (2007), Sorting and incentive effects of pay for performance: An experimental investigation, Academy of Management Journal Vol. 50, Iss. 2, 387-405, and Cadsby, Song and Bi (2012) Trust, reciprocity, and guanxi in China: An experimental investigation, Management and Organization Review, Vol. 8, Iss. 2, 397-421.

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Reference : C. Bram Cadsby & Ninghua Du & Ruqu Wang & Jun Zhang, 2015. "Goodwill Can Hurt: a Theoretical and Experimental Investigation of Return Policies in Auctions," Working Papers 1501, University of Guelph, Department of Economics and Finance.

ExpertIdeasBot (talk) 04:49, 16 June 2016 (UTC)[reply]

Dr. Hoffmann's comment on this article[edit]

Dr. Hoffmann has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Experimental economics is the application of experimental methods[1] to study economic questions."
I think this is a bit misleading. Experimental economics has a very particular kind of experimental method, rather than just any as the definition implies- I would define it as a branch of economics that uses a distinct experimental method to examine economic behaviour.
I would also add a number of other purposes of experimental economics such as developing new theory, searching for new facts and regularities, evaluating policy (“wind tunnel”) and perhaps teaching and training.
The list of variants of experiments is incomplete - virtual and online experiments are missing, and field experiments need more detail.
The list of topics is a bit ad hoc. There are many others.
The method guidelines are too cursory. Also many would not agree with the last one.
Critiques is also too short to make sense to the reader.

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Reference : Swee-Hoon Chuah & Robert Hoffmann & Jeremy Larner, 2011. "Escalation Bargaining: Theoretical Analysis and Experimental Test," ICBBR Working Papers 16, International Centre for Behavioural Business Research.

ExpertIdeasBot (talk) 15:00, 24 June 2016 (UTC)[reply]

Dr. Korenok's comment on this article[edit]

Dr. Korenok has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

1. "Deductive selection principles are those that allow predictions based on the properties of the game alone. Inductive selection principles are those that allow predictions based on characterizations of dynamics."
Comment: The connection of these two sentences to preceding or following sentences is unclear. I would delete them.
2. "Presently, researchers use simulation software to conduct their research."
Comment: This sentence is out of place as a description of experiments. It belongs to agent-based computational modeling paragraph. Should be clarified or deleted.
3. "As one example of results, ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards when offered low allocations, thus behaving inconsistently with simple models of self-interest."
Comment: Not very precise. I would suggest to modify it as follows: "As one example of results, ultimatum game experiments have shown that people are willing to sacrifice money by rejecting offers of less than 30%, thus behaving inconsistently with simple models of self-interest."
4. "Specifically, economics experiments are often challenged because of concerns about their "internal validity" and "external validity", for example, that they are not applicable models for many types of economic behavior, so the experiments simply aren't good enough to produce useful answers. Interestingly, however, none of the critiques towards this methodology is specific to it, as they are immediately applicable to either theoretical or empirical approaches or both."
Comment: Not very clear. Propose to use wiki links to internal validity: https://en.wikipedia.org/wiki/Internal_validity and external validity: https://en.wikipedia.org/wiki/External_validity
Proposed change: "Specifically, economics experiments are often challenged because of concerns about their internal validity(https://en.wikipedia.org/wiki/Internal_validity) and external validity(https://en.wikipedia.org/wiki/External_validity), for example, that experimental markets with student subject do not resemble real markets, so the experiments simply aren't good enough to describe actual economic behavior. Interestingly, however, both critiques are not specific to economic experiments, as they apply to experiments in general or, even more generally, to empirical tests of theories."

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Dr. Korenok has published scholarly research which seems to be relevant to this Wikipedia article:

Reference 1: Douglas Davis & Asen Ivanov & Oleg Korenok, 2014. "Aspects of Behavior in Repeated Games: An Experimental Study," Working Papers 727, Queen Mary University of London, School of Economics and Finance.

Reference 2: Douglas D. Davis & Korenok Oleg & Edward S. Prescott, 2011. "An Experimental Analysis of Contingent Capital with Market-Price Triggers," Working Papers 1102, VCU School of Business, Department of Economics, revised Apr 2013.

Reference 3: Douglas D. Davis & Korenok Oleg, 2010. "Nominal Price Shocks in Monopolistically Competitive Markets: An Experimental Analysis," Working Papers 1003, VCU School of Business, Department of Economics, revised Jun 2011.

ExpertIdeasBot (talk) 15:36, 24 June 2016 (UTC)[reply]

Dr. Charness's comment on this article[edit]

Dr. Charness has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

1) I'm not sure I would include the phrase "in order to mimic real-world incentives". I would instead say "usually use cash to motivate subjects with financial incentives".
2) Under Coordination Games, I might add that communication has been found to be quite successful in achieving coordination on payoff-dominant equilibria in many environments. I would also delete the sentence "The way by which this happens is not yet fully understood."
3) Under Finance, it's not true that "Presently, researchers use simulation software to conduct their research." Also, there are a number of papers that explore behavioral finance experimentally, investigating the extent to which real people behave in accordance with theoretical notions.
3) Under Social Preferences, I might add that in many cases it has been found that people are willing to sacrifice payoffs to increase the total payoff for the reference group (social efficiency) even when doing so leaves them with lower payoffs than others.

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Reference 1: Charness, Gary & Feri, Francesco & Melendez-Jimenez, Miguel A. & Sutter, Matthias, 2014. "Experimental Games on Networks: Underpinnings of Behavior and Equilibrium Selection," IZA Discussion Papers 8104, Institute for the Study of Labor (IZA).

Reference 2: Garance Genicot & Gary Charness, 2004. "An Experimental Test of Risk-Sharing Arrangements," 2004 Meeting Papers 807, Society for Economic Dynamics.

ExpertIdeasBot (talk) 17:53, 27 June 2016 (UTC)[reply]

Dr. Morone's comment on this article[edit]

Dr. Morone has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I would add after "Experimental economics is the application of experimental methods[1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms." the following: Going beyond correlation analysis in order to establish causation is one of the major empirical challenges for economists. While economics, using variations in naturally occurring data, succeeded to answer causal questions through the use of theoretical models and econometric techniques, an important recent innovation to study causation is the use of controlled laboratory experiments. The power of the experimental approach in scientific inquiry can be traced to the 16th century. Since the Renaissance, the history of science has been that of fundamental advances making use of the experimental methods in the physical and biological sciences. Within economists, the usage of lab experiments has steadily increased since the pioneers began (Thurstone, 1933; Camberlin, 1948) to explore important economic phenomena in the laboratory more than a half century ago.
In order to define experimental economics, according to Smith (1982), we have to answer two questions: 1st: which of the elements of model are not observable? 2nd: what would we like to know?
The first question contains in itself a serious hindrance. We cannot observe preferences, knowledge endowment, and agent message behaviour. These are naturally occurring data and the best we can do is to interpret them in terms of model based on assumptions (i.e. Cobb-Douglas, constant elasticity of substitution, homothetic), knowledge (i.e. complete, incomplete, common), and behaviour (i.e. cooperative, noncooperative). Testing of any of these models cannot be separated from each other, and necessarily must take into consideration those unobservable elements jointly.
Concerning the second question, we would like to know enough about how agents’ behaviour is affected by alternative environments and institutions so that we can classify them according to the mapping they provide into outcomes. Do some institutions yield, for instance, Pareto’s weak optimality or strong optimality, and/or stable prices, and, if so, are the results robust with respect to alternative environments?
As pointed out by Vernon Smith “these two questions together tell us that what we want to know is inaccessible using naturally occurring data because the key elements are unobservable and/or cannot be controlled. Laboratory experiments can help us to learn what we want to know, if certain precepts that constitute proposed sufficient conditions for a valid controlled laboratory experiment are satisfied.”
-Non-satiation: Agents strictly prefer more to less in the reward medium. -Salience: Agents have the unqualified right to claim rewards that increase in the good outcomes in an experiment. -Dominance: Own rewards dominate any subjective cost of transaction (or other motivation) in the experimental market. -Privacy: The subjects in an experiment each receive information only on his/her own reward schedule. -Parallelism: Proposition about behaviour and/or the performance of institutions that have been tested in the laboratory (or field) apply also outside the laboratory if similar conditions hold constant.
In a controlled laboratory experiment the study of causation among variables is typically achieved via randomization. In this manner, randomization is an instrumental variable that is exogenous by definition.
Probably this is the explanation why experimental technique has gained momentum, among economists, over the past several decades. Holt (2004) and List (2009) have well documented that experimental economics is a “boom industry”, showing the impressive raise of publications using this methodology.
References Thurstone, L. L. (1931), "The measurement of social attitudes", The Journal of Abnormal and Social Psychology, Vol 26(3), pp. 249-269.
Chamberlin, E. H. (1948), "An Experimental Imperfect Market", Journal of Political Economy
Vol. 56, No. 2 , pp. 95-108

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Reference 1: Meroz, Yael & Morone, Andrea & Morone, Piergiuseppe, 2009. "Eliciting environmental preferences of Ghanaians in the laboratory: An incentive-compatible experiment," MPRA Paper 17107, University Library of Munich, Germany.

Reference 2: Alfarano, Simone & Camacho, Eva & Morone, Andrea, 2015. "Do investors rely too much on public information to be justified by its accuracy? An experimental study," FinMaP-Working Papers 30, Collaborative EU Project FinMaP - Financial Distortions and Macroeconomic Performance: Expectations, Constraints and Interaction of Agents.

Reference 3: Morone, Andrea & Ozdemir, Ozlem, 2012. "Black swan protection: an experimental investigation," MPRA Paper 38842, University Library of Munich, Germany.

ExpertIdeasBot (talk) 18:18, 27 June 2016 (UTC)[reply]

Dr. Filippin's comment on this article[edit]

Dr. Filippin has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I think the article is acceptable for a big audience and does not contain big mistakes.
However, my impression is that it does not properly deliver the state of the art. In general, the article does not convey the message that experiments are mostly "micro" In more detail, looking at the experimental topics one does not receive the message that a lot of experimenta study individual behavioral traits (and not only social preferences).
Morevoer, the use of games to be tested should not be limited to Coordination Games.
The contents do not match the list below,
"One can loosely classify economic experiments using the following topics: Markets Games[5][6] Evolutionary game theory Decision making Bargaining Auctions Coordination Social Preferences Learning Matching[disambiguation needed] Field Experiments"

The section "Critiques" is unclear and the reference to "internal validity" is inappropriate.

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Reference 1: Paolo Crosetto & Antonio Filippin, 2013. "A Theoretical and Experimental Appraisal of Five Risk Elicitation Methods," Jena Economic Research Papers 2013-009, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

Reference 2: Antonio Filippin, 2003. "Discrimination and workers' expectations: experimental evidence," Departmental Working Papers 2003-16, Department of Economics, Management and Quantitative Methods at Universita degli Studi di Milano.

ExpertIdeasBot (talk) 18:25, 27 June 2016 (UTC)[reply]

Dr. Bigoni's comment on this article[edit]

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Until the 1990s, simple adaptive models, such as Cournot competition or fictitious play, were generally used.
I'd replace "Cournot competition" with "cournot dynamics"
Also, I would not include Agent-based computational modeling within this article, as it has little (basically nothing) to do with experimental economics. Instead, I would add references to neuroeconomics and to on-line experiments.

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Reference : Maria Bigoni & Stefania Bortolotti & Marco Casari & Diego Gambetta & Francesca Pancotto, 2013. "Cooperation Hidden Frontiers: The Behavioral Foundations of the Italian North-South Divide," Economics Working Papers ECO2013/04, European University Institute.

ExpertIdeasBot (talk) 18:36, 27 June 2016 (UTC)[reply]

Dr. Vranceanu's comment on this article[edit]

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Experimental economists generally adhere to the following methodological guidelines:
- Incentivize subjects with real monetary payoffs. - Publish full experimental instructions. - Do not use deception. - Avoid introducing specific, concrete context.
In many experiments, subjects will be randomly allocated to a "control" group and a "treatment'" group subject to a variation in the control variable. The majority of studies in experimental economics will use a "between-subjects" design, where a subject cannot participate to more than one treatment.

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Reference : Radu Vranceanu & Fouad El Ouardighi & Delphine Dubart, 2013. "Coordination in Teams : A Real Effort-task Experiment with Informal Punishment," Post-Print hal-00857364, HAL.

ExpertIdeasBot (talk) 18:36, 27 June 2016 (UTC)[reply]

Dr. Normann's comment on this article[edit]

Dr. Normann has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article is good but somewhat US biased. Selten is mentioned only as a footnote whereas the common understanding is that both Selten and Smith are the pioneers (with Selten’s first experiment even going back to the late 1950s). The learning literature should also incliudes some papers written by Europeans which are missing.
The learning article cites too many people and papers that/who are just not that relevant. Not mentioning any names but a paper with less than 20 citations should not belong here. Compare the section on social preferences with no paper citated at all.
I was puzzled by Agent-based computational modeling being included in this article. I do not see any relationship to exp econ as outlined in this article

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Reference 1: Normann, Hans-Theo & Wallace, Brian, 2011. "The impact of the termination rule on cooperation in a prisoner's dilemma experiment," DICE Discussion Papers 19, HeinrichHeineUniversitat Dusseldorf, Dusseldorf Institute for Competition Economics (DICE).

Reference 2: Hinloopen, Jeroen & Muller, Wieland & Normann, Hans-Theo, 2013. "Output commitment through product bundling: Experimental evidence," DICE Discussion Papers 116, HeinrichHeineUniversitat Dusseldorf, Dusseldorf Institute for Competition Economics (DICE).

ExpertIdeasBot (talk) 18:37, 27 June 2016 (UTC)[reply]

Dr. Balafoutas's comment on this article[edit]

Dr. Balafoutas has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics)."
Comment: Experiments are not only used to understand markets or institutions, but also human decision making processes. This becomes clear later on when decision making experiments are mentioned but it would be good to mention already in this opening paragraph.
Under "Experimental topics", it is a bit unclear to me why certain topics (coordination, learning, market games, social preferences etc.) are explained in some detail while others are not. Finance experiments, for instance, are not included in the list of experimental topics but still explained in one dedicated paragraph. My suggestion here would be to include experimental finance to the list of topics, and then if possible to add one paragraph on decision making and one on field experiments. The paragraph on decision making could discuss briefly expected utility theory, the Allais paradox and prospect theory (references would include the von Neumann-Morgenstern 1944 book and some of the work from Kahneman and Tversky, probably their 1979 and 1992 papers, and perhaps some more recent developments). The paragraph on field experiments could be based around some of the work by John List and coauthors, such as these two: Harrison, G.W. and List, J.A. (2004) Field Experiments. Journal of Economic Literature 42, 1009-1055 List, John A. and Reiley, David R. 2008. “Field Experiments.” in: Steven N. Durlauf and Lawrence E. Blume (eds.) The New Palgrave Dictionary of Economics. Second edition. Palgrave Macmillan.
On Methodology: I do not agree with the list of "Guidelines", at least not with the ordering of these guidelines. In my opinion, the list of guidelines should be: 1. Induced value theory (Versnmon Smith, AER, 1976) 2. Randomization 3. Controlled (economic or institutional) environment through variation of the parameters by the experimenter
These three are the most important principles in experimental economics. After points 1-3 other guidelines can be included (such as no deception). Publishing the instructions is far less important and almost trivial and does not deserve to be number 2 on that list, while leaving out of the list the cornerstone of experimental methodology (randomization). But I would NOT include the avoidance of a specific concrete context: some experiments do use contexts, for instance experiments in which framing may matter.

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Reference : E. Glenn Dutcher & Loukas Balafoutas & Florian Lindner & Dmitry Ryvkin & Matthias Sutter, 2013. "Strive to be first or avoid being last: An experiment on relative performance incentives," Working Papers 2013-08, Faculty of Economics and Statistics, University of Innsbruck.

ExpertIdeasBot (talk) 18:44, 27 June 2016 (UTC)[reply]

Dr. Schudy's comment on this article[edit]

Dr. Schudy has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives."
change to "Economic laboratory experiments usually use cash to motivate subjects, in order to mimic real-world incentives. (see also Induced Value theory by Vernon Smith)"
Add also link to Vernon Smith here: https://en.wikipedia.org/wiki/Vernon_L._Smith
"A fundamental aspect of the subject is design of experiments. Experiments may be conducted in the field or in laboratory settings, whether of individual or group behavior.[3]"
Change / add here "A fundamental aspect of the subject is design of experiments. Experiments may be conducted in the field or in laboratory settings (for a discussion see e.g. Falk and Heckman, 2009 or Harrison and List (2004)), and can be used to study behavior of individuals or groups[3]"

References Falk, A., & Heckman, J. J. (2009). Lab experiments are a major source of knowledge in the social sciences. Science, 326(5952), 535-538.
Harrison, G. W., & List, J. A. (2004). Field experiments. Journal of Economic literature, 42(4), 1009-1055.

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Reference : Bjorn Bartling & Urs Fischbacher & Simeon Schudy, 2014. "Pivotality and Responsibility Attribution in Sequential Voting," TWI Research Paper Series 90, Thurgauer Wirtschaftsinstitut, Universitat Konstanz.

ExpertIdeasBot (talk) 18:50, 27 June 2016 (UTC)[reply]

Dr. Blanco's comment on this article[edit]

Dr. Blanco has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Original sentence: Experiments may be conducted in the field or in laboratory settings, whether of individual or group behavior.
Comment: not sure what the author is intending to say here. The word *whether* is awkward here.
Comment: in the list of Experimental Topics, an item of the list is *Matching*. Maybe the author is referring to Mechanism Design.
Original Paragraph: The term "social preferences" refers to the concern (or lack thereof) that people have for each other's well-being, and it encompasses altruism, spitefulness, tastes for equality, and tastes for reciprocity. Experiments on social preferences generally study economic games including the dictator game, the ultimatum game, the trust game, the public goods game, and modifications to these canonical settings. As one example of results, ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards when offered low allocations, thus behaving inconsistently with simple models of self-interest. Economic experiments have measured how this deviation varies across cultures.
Suggested new paragraph:
The term "social preferences" refers to the concern (or lack thereof) that people have for other's well-being, and it encompasses altruism, spitefulness, tastes for equality, and tastes for reciprocity. Experiments on social preferences generally study economic games including the dictator game, the ultimatum game, the trust game, the public goods game, and modifications to these canonical settings. As one example of results, ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards when offered a low share of the pie, thus behaving inconsistently with simple models of self-interest (which predicts that any offer above zero should be accepted) . Economic experiments have shown that this deviation varies across cultures, also depending on the procedure that assigns the property right on the pie.
Original Paragraph: Experimental economists generally adhere to the following methodological guidelines:
Incentivize subjects with real monetary payoffs. Publish full experimental instructions. Do not use deception. Avoid introducing specific, concrete context.
Suggested Paragraph:
Incentivize subjects with real monetary payoffs. Payoffs depend on the subjects decisions during the experiment, and very often, on their interaction with other participants. Payoff have to be salient and relevant, they should at least cover the opportunity cost of the subjects for the time spent in the lab. Publish full experimental instructions. During the experimental session, instructions have to be common knowledge. Do not use deception. Avoid introducing specific, concrete context.
General note: The section on social preferences is really short. I would extend it a bit.
Current version: The term "social preferences" refers to the concern (or lack thereof) that people have for each other's well-being, and it encompasses altruism, spitefulness, tastes for equality, and tastes for reciprocity. Experiments on social preferences generally study economic games including the dictator game, the ultimatum game, the trust game, the public goods game, and modifications to these canonical settings. As one example of results, ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards when offered low allocations, thus behaving inconsistently with simple models of self-interest. Economic experiments have measured how this deviation varies across cultures.
Suggested version:
The term "social preferences" refers to the concern (or lack thereof) that people have for other's well-being, and it encompasses altruism, spitefulness, tastes for equality, and tastes for reciprocity. Experiments on social preferences generally study economic games including the dictator game, the ultimatum game, the trust game, the public goods game, and modifications to these canonical settings. As one example of results, ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards when offered a low share of the pie, thus behaving inconsistently with simple models of self-interest (which predicts that any offer above zero should be accepted) . Economic experiments have shown that this deviation varies across cultures, also depending on the procedure that assigns the property right on the pie. One of the main discussion in the literature on social preferences is whether individuals care about outcomes (i.e. resulting payoffs) or intentions (the actions that led to the payoffs and the alternative actions available to the decision maker that he did not pursue). Note: here cite the following article: Falk, Armin, Ernst Fehr, and Urs Fischbacher. "Testing theories of fairness—Intentions matter." Games and Economic Behavior 62.1 (2008): 287-303.
There is also evidence that individuals are more prosocial and less antisocial towards people similar to them, that is, group identity is important to understand social preferences. Here cite: Chen, Yan, and Sherry Xin Li. "Group identity and social preferences." The American Economic Review 99.1 (2009): 431-457. AND: Falk, Armin, and Christian Zehnder. "Discrimination and in-group favoritism in a citywide trust experiment." (2007).
An additional general comment is that the section on methodology is very poor. There are some scholars who prefer not to write about methodology, but if a section on this would be included it should be richer.
In that section one can talk about endowment effect, house money effect, demand effect, experimenter effect, just to name few things that we have to take into account regarding our lab protocols.

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Reference : Blanco, Mariana & Engelmann, Dirk & Normann, Hans-Theo, 2010. "A within-subject analysis of other-regarding preferences," DICE Discussion Papers 06, HeinrichHeineUniversitat Dusseldorf, Dusseldorf Institute for Competition Economics (DICE).

ExpertIdeasBot (talk) 19:36, 1 July 2016 (UTC)[reply]

Dr. Matthews's comment on this article[edit]

Dr. Matthews has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

There is little on the actual "practice" of experimental economics and too much on "topic classification," some of which (agent-based models?) have little or nothing to do with experimental economics.

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Reference : Carpenter, Jeffrey P. & Matthews, Peter Hans & Robbett, Andrea, 2015. "Compensating Differentials in Experimental Labor Markets," IZA Discussion Papers 8820, Institute for the Study of Labor (IZA).

ExpertIdeasBot (talk) 19:45, 1 July 2016 (UTC)[reply]

Dr. Branas-Garza's comment on this article[edit]

Dr. Branas-Garza has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

COMMENT 1: Paragraph 2: “A fundamental aspect of the subject is design of experiments. Experiments may be conducted in the field or in laboratory settings, whether ofindividual or group behavior.[3]“ after [3] ADD:
Recent papers explore differences between results arising from the lab and those coming from the field and between experimental subjects and ordinary people. Newref 1.
Newref 1.
Levitt, Steven. D. & List, John A. “What do laboratory experiments measuring social preferences reveal about the real world?” Journal of Economic Perspectives 21,153–174. Falk, Armin and Heckman, James J. (2009). “Lab experiments are a major source of knowledge in the social sciences”. Science 326, 535–38. Exadaktylos, Filippos, Espín, Antonio M and Brañas-Garza, Pablo (2013) “Experimental subjects are not different” Nature Scientific Reports 3 (1213).

COMMENT 2: Section called Critiques: The above guidelines have developed in large part to address two central critiques (…), however, none of the critiques towards this methodology is specific to it, as they are immediately applicable to either theoretical or empirical approaches or both.[15][citation needed]
Citation needed: → Thaler, Richard H (2016). “Behavioral Economics: Past, Present, and Future”, The American Economic Review, 106(7): 1577–1600.
COMMENT 3: reference in given in Footnote 10 is “old”
Camerer, Colin F. (2011-12-30). "The Promise and Success of Lab-Field Generalizability in Experimental Economics: A Critical Reply to Levitt and List". Working Paper Series.
This paper was published as chapter 14 in Frechette and Schotter ”Handbook of Experimental Economic Methodology”, Oxford University Press 2015.
REREFENCES (add this 2 books)
Brañas-Garza, Pablo and Cabrales, Antonio (2015). Experimental Economics I: Economic Decisions. London: Palgrave Macmillan.
Brañas-Garza, Pablo and Cabrales, Antonio (2015). Experimental Economics II: Economic Applications. London: Palgrave Macmillan.

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Reference : Branas Garza, Pablo & Espinosa Alejos, Maria Paz & Giritligil, Ayca E., 2013. "Democratic Values Transmission," DFAEII Working Papers DFAEII;2013-02, University of the Basque Country - Department of Foundations of Economic Analysis II.

ExpertIdeasBot (talk) 19:51, 1 July 2016 (UTC)[reply]

Dr. Chaudhuri's comment on this article[edit]

Dr. Chaudhuri has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Coordination games are games with multiple pure strategy Nash equilibria. There are two general sets of questions that experimental economists typically ask when examining such games: (1) Can laboratory subjects coordinate, or learn to coordinate, on one of multiple equilibria, and if so are there general principles that can help predict which equilibrium is likely to be chosen? (2) Can laboratory subjects coordinate, or learn to coordinate, on the Pareto best equilibrium and if not, are there conditions or mechanisms which would help subjects coordinate on the Pareto best equilibrium? Deductive selection principles are those that allow predictions based on the properties of the game alone. Inductive selection principles are those that allow predictions based on characterizations of dynamics. Under some conditions at least groups of experimental subjects can coordinate even complex non-obvious asymmetric Pareto-best equilibria. This is even though all subjects decide simultaneously and independently without communication. The way by which this happens is not yet fully understood.[7]
I would delete the last sentence.
I think we have a reasonable idea that coordination failures are caused by "strategic uncertainty" (van Huyck, Battalio and Beil, 1990). This is where participants understand the rules of the game but are not certain that everyone else has done so and will choose the strategy commensurate with the payoff-dominant outcome. Even small amounts of uncertainty is enough to lead to seriously sub-optimal outcomes. So any lack of coordination is not coming about as a consequence of failure of deductive reasoning, but rather strategic uncertainty. Therefore, coordination to the payoff dominant outcome requires the creation of appropriately optimistic beliefs that everyone will choose the strategy that leads to the efficient outcome. (Chaudhuri, Schotter and Sopher, 2009). There are multiple ways of achieving such coordination as shown by Devetag and Ortmann (2007).

Chaudhuri, Ananish, Andrew Schotter and Barry Sopher. (2009). “Talking ourselves to efficiency: coordination in inter-generational minimum games with private, almost common and common knowledge of advice”, Economic Journal, 119, 91-122.
Devetag, Giovanna, and Andreas Ortmann. (2007). “When and why? A critical review of coordination failure in the laboratory”, Experimental Economics, 10 (3), 331-344.
Van Huyck, John, Raymond Battalio and Richard Beil. (1990). “Tacit coordination games, strategic uncertainty, and coordination failure”,
American Economic Review, 80(1), 234-248.

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Reference 1: Vivi Alatas & Lisa Cameron & Ananish Chaudhuri & Nisvan Erkal & Lata Gangadharan, 2006. "Gender and Corruption: Insights from an Experimental Analysis," Department of Economics - Working Papers Series 974, The University of Melbourne.

Reference 2: Ananish Chaudhuri & Pushkar Maitra & Susan Skeath, 2006. "Communication, Advice and Beliefs in an Experimental Public Goods Game," Monash Economics Working Papers 05/06, Monash University, Department of Economics.

ExpertIdeasBot (talk) 20:40, 1 July 2016 (UTC)[reply]

Dr. Novarese's comment on this article[edit]

Dr. Novarese has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This article is not completely satisfactory, in my view; the main area of research of experimental economics are not clearly evident. The main results of experimental economics are even unclear.
The opening is confused: “data collected in experiments are used to …” and later “experiments are used to …”. It would be better having just one of these sentence. The second sentence states one of the area of research in experimental economics; the first says many things about experimental economics. When speaking about the aims of the experimental analysis it would be useful looking for example at this paper http://stanford.edu/~alroth/papers/86_EP_LaboratoryEperimen.pdf. Roth proposes three aims for experimental economics: testing and comparing theories, searching empirical evidence, suggesting policies. The topic of interest are correctly identified in the list (even if today we have experiments on so many areas and so any lists could be uncomplete) but, for example, there is nothin on the experiments by Kahneman and Tversky; while coordination game are presented, there is nothing about other experiments on game theory (which played a foundamental role in the development of experimental economics); there is too much attention on learning experiments (in respect to the scholars working on this field; and this said by a person working on learning!) The connection with behavioural economics should be better underlined as the role experiments played in trying to change the mainstream approach. Agent based models are not part of experimental economics. I’m not saying there are no connections, but these should be critically discussed. It could be worth stating the differences with experimental psychology
Reinald Selten is not the first scholars I’d think to, when talking about experimental economics (for example John Hey who published a well-known handbook on experimental economics, a lot of papers on decision theory, is never mentioned).

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Reference : Marco Novarese, 2004. "Learning in Different Social Contests," Game Theory and Information 0405008, EconWPA.

ExpertIdeasBot (talk) 16:22, 11 July 2016 (UTC)[reply]

Dr. Goerg's comment on this article[edit]

Dr. Goerg has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

History of Experimental Economics is missing. The different development in the US (group around Vernon Smith) and Europe (group around Heinz Sauermann and Reinhard Selten). For reviews see Roth, A.E. "On the Early History of Experimental Economics," Journal of the History of Economic Thought, 15, 1993 (available at http://stanford.edu/~alroth/history.html) and the recent and excellent dissertation by Andrej Svorenčík (available at http://dspace.library.uu.nl/handle/1874/302983)
No mention of the Noble Prize for Smith and Kahneman for their contributions to Experimental Economics. In addition, other Noble Prize winners have worked with the method of Experimental Economics: Alvin Roth, Elinor Ostrom, Reinhard Selten, John Nash and Shubik.
Link to Randomized Control Trials (RCT)?
The subcategories of Experimental Topics are inconsistent. At the beginning classes of games are used (Coordination, Markets) and then general topics like social preferences (with trust, dictator games etc), albeit social preferences can matter in coordination and markets, too. For example Gift Exchange games are usually conducted with markets and yet they are used to observe reciprocity (a result of social preferences)

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Reference 1: David Johnson & Sebastian Goerg & Jonathan Rogers, 2014. "Can't Touch This! Similarity And Willingness to Keep "Dirty Money"," Working Papers 2014-81, Department of Economics, University of Calgary, revised 10 Nov 2014.

Reference 2: Sebastian Goerg & Werner Guth & Gari Walkowitz & Torsten Weiland, 2008. "Distributive fairness in an intercultural ultimatum game," Jena Economic Research Papers 2008-028, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

ExpertIdeasBot (talk) 18:11, 26 July 2016 (UTC)[reply]

Dr. Chuah's comment on this article[edit]

Dr. Chuah has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Comment 1
"Experimental economics is the application of experimental methods to study economic questions". First sentence is a tautology. It needs to be followed by a description of what is an experiment is and how data is generated in an experiment, before going on to the next sentence about what the data is used for.
With reference to Croson and Gaechter (2009), experiments are a controlled-data generating process. In an experiment, the economic environment is under the control of the experimenter who is able to vary one factor at a time that can influence behaviour, whilst holding other factors constant. This controlled variation of factors allows causal inferences to be drawn.
Comment 2: "Economic experiments have measured how this deviation varies across cultures." It is not clear what "this deviation" refers to. Moreover, the "culture" aspect can be expanded on.
There is a sub-branch of experimental economics called cross-cultural experimental economics. The homo economicus assumption assumes pan-humanness or universalism in economic behaviour. However, Roth et al. (1991) first showed that people in different countries behaved differently in ultimatum game experiments. Henrich (2000) found a different in the bargaining behaviour between rural hunter-gatherers and urban university students. Behavioural differences along cultural lines was also found for trust games (for e.g. Croson and Buchan 1999, Willinger et al. 2003) and public good games (e.g. Burlando and Hey 1997, Ockenfels and Weimann 1999).
The above stream of studies established differences in the way individuals from different nations interact within their own cultures. Chuah et al. (2007) explored behavioural differences in cross-cultural interactions using a series of ultimatum game experiments in which Malaysian and UK subjects played co-players of their own as well as of the other culture. They confirmed the existence of cultural difference in participant behaviour in both intra- and inter-national interactions. Fershtman and Gneezy (2001) and Burns (2006) had earlier conducted inter-ethnic games with co-players of the same nationality and found behavioural differences along ethnic lines.
Cross-cultural experimental economists have now moved on to look at the underlying mechanisms by which culture impacts on behaviour in order to understand what gives rise to such differences. Chuah et al. (2009) found that the differences in ultimatum game behaviour between two national groups are explained with reference to differences in their responses to particular dimensions of the World Values Survey questionnaire. These attitudinal differences are interpreted as cultural difference between the subject groups that are responsible for their differential behaviour.

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We believe Dr. Chuah has expertise on the topic of this article, since she has published relevant scholarly research:

Reference : Swee-Hoon Chuah & Robert Hoffmann & Jeremy Larner, 2011. "Escalation Bargaining: Theoretical Analysis and Experimental Test," ICBBR Working Papers 16, International Centre for Behavioural Business Research.

ExpertIdeasBot (talk) 18:28, 26 July 2016 (UTC)[reply]

Dr. Innocenti's comment on this article[edit]

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Comment 1
"Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. " is vague and mislabeled Davis-Holt (1993) classification could be introduced here: ""Data collected in experiments are used for a) Test of Behavioral Hypotheses. By constructing a laboratory environment that satisfies as many of the structural assumptions of a particular theory, it is possible to verify its behavioral implications 2) Theory Stress Tests. To examine the sensitivity of a theory to violations of obviously unrealistic assumptions 3) Searching for Empirical Regularities. Heuristic experiments to discover and document stylized facts Douglas D. Davis, Charles A. Holt, Experimental Economics, Princeton University Press, 1993 Comment 2
"An alternative approach with experimental dimensions is agent-based computational modeling." is wrong. Agent-based computational modeling is not an experimental activity but the computational modeling of economic processes computational modeling of economic processes (including whole economies) as dynamic systems of interacting agents.

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Reference 1: Francesco Feri & Alessandro Innocenti & Paolo Pin, 2011. "Psychological Pressure in Competitive Environments: Evidence from A Randomized Natural Experiment: Comment," Working Papers 2011-03, Faculty of Economics and Statistics, University of Innsbruck.

Reference 2: Alessandro Innocenti & Antonio Nicita, 2009. "Virtual vs. Standard Strike: An Experiment," Labsi Experimental Economics Laboratory University of Siena 026, University of Siena.

ExpertIdeasBot (talk) 18:36, 26 July 2016 (UTC)[reply]

Dr. Holm's comment on this article[edit]

Dr. Holm has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

First of all I think the introduction to experimental should include some of the main findings that can be traced to economic experiments (e.g., loss aversion, convergence to equilibrium in markets with asymmetric information, findings of various social preferences).
Second, I think the categorization of topics is somewhat strange. It might be an idea to distinguish between situation/context (like coordination games, market games) and behavioral mechanism (like learning and social preference). This would probably make it easier for the reader to understand and also realize that the different topics do not exclude each other. I also somehow missed "bargaining" as one separate (situational) topic.
"Experimental economics is the application of experimental methods[1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics)." 1. Nothing is directly wrong in this paragraph, but I think one of the key features of one of the most common type of experiments is missing, namely the manipulation of one variable to be able to study causal effects. 2. I am also somewhat surprised that it is mentioned in the 2nd sentence that one of the main purposes is to study "effect sizes". Experiments are often deliberately designed artificial situations (at least lab experiments) which makes effect sizes context dependent and therefore not especially informative. 3. Another major purpose with experiment is to explore new behavioral mechanisms. Some mechanisms like conditional corporation and antisocial punishment seem to be the result of observations of regularities in experimental data and not of direct tests of theories.
4. In my opinion one of the best introductions to what experimental economics is given in the first chapter of the Handbook of Experimental Economics (Kagel and Roth, 1995) where Alvin Roth discusses three different purposes of experimental economics (speeking to theorists etc.). Perhaps the text can be inspired by this text.

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Reference 1: Danielson, Anders & Holm, Hakan, 2004. "Do You Trust Your Brethren? Eliciting Trust Attitudes and Trust Behavior in a Tanzanian Congregation," Working Papers 2004:2, Lund University, Department of Economics.

Reference 2: Ola Andersson & Hakan J. Holm & Jean-Robert Tyran & Erik Wengstrom, 2013. "Risk aversion relates to cognitive ability: Fact or Fiction?," Discussion Papers 13-10, University of Copenhagen. Department of Economics.

ExpertIdeasBot (talk) 19:10, 26 July 2016 (UTC)[reply]

Dr. Alevy's comment on this article[edit]

Dr. Alevy has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This entry could be better organized by bringing some logic to the initial classification of economic experiments. The current list mixes topics of interests (Markets, Games, etc.) with methods (Field Experiments). Better perhaps to classify across topic and method, with first pass at topics beginning with the 'interactive vs. individual choice' distinction (of course this will not fit completely; e.g. 'Learning' can be individual or social) and the methods (lab vs. field).
The cited Handbook (Kagel and Roth 1995) is of course quite valuable, however the recent Frechette and Schotter (2015) [Handbook of Experimental Economics Methodology; Oxford] is a reference that should also be highlighted. Further, drilling down into the 'lab vs. field' distinction the contribution of Harrison and List (2004) remains valuable.
Building further on some of the prominent issues in Frechette and Schotter (2015) as well as Caplin and Schotter (2010) [Foundations of Positive and Normative Economics] the importance of topics related to interaction of psychology and economics (e.g. process vs. outcome based investigations) should be noted and thus also the important influence of Kahneman and Tversky on the field (see e.g. Shafir ed. 2004; Preference, Belief, and Similarity; MIT).
Finally, while there is a nice set of citations of important work by Vernon Smith, some of his more recent contributions including his Nobel Lecture (expanded into book form as "Rationality in Economics: Constructivist and Ecological Forms; Cambridge 2007) would be useful to include.

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We believe Dr. Alevy has expertise on the topic of this article, since he has published relevant scholarly research:

Reference : Jonathan E. Alevy & Michael K. Price, 2014. "Advice in the Marketplace: A Laboratory Study," Experimental Economics Center Working Paper Series 2014-03, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.

ExpertIdeasBot (talk) 17:03, 27 July 2016 (UTC)[reply]

Dr. Nosenzo's comment on this article[edit]

Dr. Nosenzo has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Experiments may be conducted in the field or in laboratory settings, whether of individual or group behaviour" -- recently many experiments are being conducted online, using web platforms such as Amazon MTurk. See e.g. http://link.springer.com/article/10.1007/s10683-011-9273-9#/page-1

"The term "social preferences" refers to the concern (or lack thereof) that people have for each other's well-being, and it encompasses altruism, spitefulness, tastes for equality, and tastes for reciprocity" -- other concerns that could be added are: tastes for efficiency.

"As one example of results, ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards when offered low allocations" -- I guess a more correct statement would be: ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards in order to harm those who have offered them low allocations.

"Experimental economists generally adhere to the following methodological guidelines: Incentivize subjects with real monetary payoffs. Publish full experimental instructions. Do not use deception. Avoid introducing specific, concrete context." -- I am not sure that there is a broad agreement on the latter point, "Avoid introducing specific, concrete context".

"Specifically, economics experiments are often challenged because of concerns about their "internal validity" and "external validity", for example, that they are not applicable models for many types of economic behavior, so the experiments simply aren't good enough to produce useful answers. Interestingly, however, none of the critiques towards this methodology is specific to it, as they are immediately applicable to either theoretical or empirical approaches or both". This paragraph is not very clear. There should be an explanation of what "internal" and "external" validity means. See for instance http://www.tandfonline.com/doi/full/10.1080/13501780500086081

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We believe Dr. Nosenzo has expertise on the topic of this article, since he has published relevant scholarly research:

Reference 1: Michalis Drouvelis & Daniele Nosenzo, 2012. "Group Identity and Leading-by-Example," Discussion Papers 2012-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

Reference 2: Abeler, Johannes & Nosenzo, Daniele, 2013. "Self-Selection into Economics Experiments Is Driven by Monetary Rewards," IZA Discussion Papers 7374, Institute for the Study of Labor (IZA).

ExpertIdeasBot (talk) 16:34, 2 August 2016 (UTC)[reply]

Dr. Vadovic's comment on this article[edit]

Dr. Vadovic has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I find this article quite inaccurate and badly written. I propose extensive changes.

Original text Experimental economics is the application experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).[2]

Comments and edits: 1. (1st sentence) should be: "...of economic questions"
2. (after the first sentence) insert: "The key property of an experiment is that it allows the scientist to generate a controlled variation in the data [ref. Falk & Heckman, 2009]. For example, in the market setting, one can run a treatment in which the resale of assets is disallowed in order to study the impact of speculation on pricing [ref. Lei, Noussair & Plott, 2001]; similarly, in a simple labor market setting, one can study the incentive effects of various contractual features by incrementally adding fines or bonuses to the base wage [ref. Fehr, Klein & Schmidt, 2007]."
3. (2nd sentence) rewrite as: "Data collected in experiments is used to test the validity of economic theories, study various behavioral heuristics and biases, and evaluate the performance of markets and institutions."
4. (3rd sentence): replace with: "Economic experiments rely on two general principles: 1. subjects are paid cash for participating as well as for their performance in the experiment; 2. subjects are never deceived in any aspect of the experiment. The objective of the first principle is to induce real incentives - real decisions are motivated by real payments. The second principle is important to ensure that the researcher has successfully induced the desired incentives. This is the case only when subjects believe (and understand) the rules of the experiment."
5. (the last two sentences) replace with: "Economic experiments have a wide scope of applicability. They are used to understand individual decision making, strategic interactions and functioning of markets."
Revised text: Experimental economics is the application experimental methods to study of economic questions. The key property of an experiment is that it allows the scientist to generate a controlled variation in the data [Falk & Heckman, 2009]. For example, in the market setting, one can run a treatment in which the resale of assets is disallowed in order to study the impact of speculation on pricing [ref. Lei, Noussair & Plott, 2001]; similarly, in a simple labor market setting, one can study the incentive effects of various contractual features by incrementally adding fines or bonuses to the base wage [ref. Fehr, Klein & Schmidt, 2007]. Data collected in experiments is used to test the validity of economic theories, study various behavioral heuristics and biases, and evaluate the performance of markets and institutions. Economic experiments rely on two general principles: 1. subjects are paid cash for participating as well as for their performance in the experiment; 2. subjects are never deceived in any aspect of the experiment. The objective of the first principle is to induce real incentives - i.e., real decisions are motivated by real payments. The second principle is important to ensure that the researcher has successfully induced the desired incentives. This is the case only when subjects believe (and understand) the rules of the experiment. Economic experiments have a wide scope of applicability. They are used to understand individual decision making, strategic interactions and functioning of markets.
References: Falk, Armin, and James J. Heckman. "Lab Experiments are a Major Source of Knowledge in the Social Sciences." Science 326 (2009): 535-538. Lei, Vivian, Charles N. Noussair, and Charles R. Plott. "Nonspeculative bubbles in experimental asset markets: Lack of common knowledge of rationality vs. actual irrationality." Econometrica 69, no. 4 (2001): 831-859. Fehr, Ernst, Alexander Klein, and Klaus M. Schmidt. "Fairness and contract design." Econometrica 75, no. 1 (2007): 121-154.

Original text: One can loosely classify economic experiments using the following topics:
Markets Games[5][6] Evolutionary game theory Decision making Bargaining Auctions Coordination Social Preferences Learning Matching[disambiguation needed] Field Experiments

Comments and edits:
I would certainly not consider these categories as a "classification for economic experiments." If one would like classification I would support the classification by Harrison and List (2004): 1. laboratory experiments 2. artefactual field experiments 3. framed field experiments 4. natural experiments
As for the topics, experiments made contributions to the topics listed above and to many other topics. Below I have fixed the text and revised the list of topics to make it more complete - I made no attempt to be exhaustive.
Revised text: Economic experiments have made major contributions to the following selected topics:
Individual choice under risk and uncertainty Strategic behavior in games Coordination Learning Markets Finance Social preferences Charitable giving Trust and reciprocity Public goods and voluntary contributions Bargaining Auctions Contracts Networks Voting and political economy Economic design Experimental macroeconomics
I think it would be good to have experts in each field write a small paragraph about each one of these entries. I do not feel competent to pick the right words for each one of them but I can certainly try if I am invited to do so. For now I will only make some comments regarding the existing entries.
Ref. Harrison, Glenn W., and John A. List. "Field experiments." Journal of Economic literature 42.4 (2004): 1009-1055.

Original text: Coordination games[edit]
Coordination games are games with multiple pure strategy Nash equilibria. There are two general sets of questions that experimental economists typically ask when examining such games: (1) Can laboratory subjects coordinate, or learn to coordinate, on one of multiple equilibria, and if so are there general principles that can help predict which equilibrium is likely to be chosen? (2) Can laboratory subjects coordinate, or learn to coordinate, on the Pareto best equilibrium and if not, are there conditions or mechanisms which would help subjects coordinate on the Pareto best equilibrium? Deductive selection principles are those that allow predictions based on the properties of the game alone. Inductive selection principles are those that allow predictions based on characterizations of dynamics. Under some conditions at least groups of experimental subjects can coordinate even complex non-obvious asymmetric Pareto-best equilibria. This is even though all subjects decide simultaneously and independently without communication. The way by which this happens is not yet fully understood.[7]

Comments and edits:
1. In sentence "(2) Can laboratory subjects coordinate,..." I propose removing "laboratory." This article is about lab and field experiments.
2. starting with "Deductive selection ... " I find this discussion rather cryptic narrowly focused. I would replace it with something along these lines: "An experimental game that has been the workhorse of research on coordination is the minimum effort (weak-link) game. In this game a group of players interact by simultaneously choosing a number between 1 and K such that each member's payoff is increasing in the group's minimum and decreasing in the member's own choice. All outcomes in which all members of the group choose the same number are (pure strategy) Nash equilibria. These equilibria are Pareto ranked form the best, in which everyone chooses K, to the worst, where everyone chooses 1. Early laboratory research has used this game to demonstrate that subjects have hard time coordinating on the Pareto optimal equilibrium [refs. Batalio...]. Since then much effort has been devoted to studying mechanisms for facilitating coordination. Mechanisms that have been identified as highly successful in improving coordination are financial incentives (such as, temporary bonuses) [Brandts And Cooper 2006], communication [Blume & Ortmann 2007], endogenous group formation [Weber 2006], and putting subjects into teams rather than letting them decide as individuals [Irlendbush ...]."
Ref. Brandts, Jordi, and David J. Cooper. "A change would do you good…. An experimental study on how to overcome coordination failure in organizations." The American Economic Review 96.3 (2006): 669-693. Blume, Andreas, and Andreas Ortmann. "The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria." Journal of Economic theory 132.1 (2007): 274-290. Weber, Roberto A. "Managing growth to achieve efficient coordination in large groups." The American Economic Review 96.1 (2006): 114-126. Feri, Francesco, Bernd Irlenbusch, and Matthias Sutter. "Efficiency Gains from Team-Based Coordination—Large-Scale Experimental Evidence."American Economic Review 100.4 (2010): 1892-1912.

Original text:
Market games[edit]
Edward Chamberlin is thought to have conducted "not only the first market experiment, but also the first economic experiment of any kind."[8] Vernon Smith, drawing on Chamberlin's work, but also modifying it in key respects, conducted pioneering economics experiments on the convergence of prices and quantities to their theoretical competitive equilibrium values in experimental markets.[8] Smith studied the behavior of "buyers" and "sellers", who are told how much they "value" a fictitious commodity and then are asked to competitively "bid" or "ask" on these commodities following the rules of various real world market institutions (e.g., the Double auction as well the English and Dutchauctions). Smith found that in some forms of centralized trading, prices and quantities traded in such markets converge on the values that would be predicted by the economic theory of perfect competition, despite the conditions not meeting many of the assumptions of perfect competition (large numbers, perfect information).
Over the years, Smith pioneered – along with other collaborators – the use of controlled laboratory experiments in economics, and established it as a legitimate tool in economics and other related fields. Charles Plott of the California Institute of Technology collaborated with Smith in the 1970s and pioneered experiments in political science, as well as using experiments to inform economic design or engineering to inform policies. In 2002, Smith was awarded (jointly with Daniel Kahneman) the Bank of Sweden Prize in Economic Sciences "for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms".

Comments and edits: I would consider rewriting the first paragraph. In my opinion, the text can use more detail on the purposes of the early experiments and details regarding the market institutions.
Edward Chamberlin is credited with conducting "not only the first market experiment, but also the first economic experiment of any kind."[8] In a classroom setting he divided students into two groups: buyers and sellers. Each buyer had a private valuation for a virtual object; each sellers could produce an object at a privately known cost. No participant knew the full demand and supply schedules. The task was for the buyers and sellers to mingle, negotiate and, if mutually agreeable, trade. This was the first experimental implementation of an open pit market. The purpose of Chamberlain experiment was to discredit the classical notion of competitive equilibrium as a theory of price formation. The experiment has shown that prices were indeed dispersed and not concentrated around the competitive equilibrium. Vernon Smith was inspired by Chamberlain's work. He went on to implement a trading institution which was supposed to do a better job at discrediting the competitive price theory. First, the market was organized as a double auction which greatly reduces the informational frictions of the pit market by collecting and displaying all bids and asks from all buyers and sellers. At any time a buyer can buy at the lowest standing ask and any seller can sell at the highest standing bid. Second, Vernon Smith repeated the market several times ("a stationary replication") to give traders experience.and allow the market to converge to some steady state. These two institutional changes had a profound effect on the results. Prices converged very quickly to the competitive equilibrium. Vernon Smith has shown that with " remarkably little learning, strict privacy, and a modest number [of traders], inexperienced traders converge rapidly to a competitive equilibrium under the double auction institution mechanism. The market works under much weaker conditions than had traditionally been thought to be necessary." [Smith 1991] These results have been replicated many times all over the world. They are robust to changes in demand and supply schedules and different institutional rules or other (non-student) types of participants. Smith's experiments are some of the most powerful, insightful and elegant experiments within economics and social sciences. They have been widely adopted and integrated into classroom instruction in introductory economics courses. Following Smith's experiments the research on market mechanisms has exploded into what is now a vast literature. Among some of the significant contributions are the examination of market mispricing and bubbles [ref. Smith, Suchanek & Williams 1988], pricing of financial securites[ref.Bossaerts & Plott 2004], and the design and performance of prediction markets [ref. Wolfers & Zitzewitz 2004].
The second paragraph is ok.
Refs. Smith, Vernon L. Papers in experimental economics. Cambridge University Press, 1991. Smith, Vernon L., Gerry L. Suchanek, and Arlington W. Williams. "Bubbles, crashes, and endogenous expectations in experimental spot asset markets."Econometrica: Journal of the Econometric Society (1988): 1119-1151. Bossaerts, Peter, and Charles Plott. "Basic principles of asset pricing theory: Evidence from large-scale experimental financial markets." Review of Finance 8.2 (2004): 135-169. Wolfers, Justin, and Eric Zitzewitz. "Prediction markets." The Journal of Economic Perspectives 18.2 (2004): 107-126.

Original text: Finance[edit]
Experimental finance studies financial markets with the goals of establishing different market settings and environments to observe experimentally and analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanism and returns processes. Presently, researchers use simulation software to conduct their research.
For instance, experiments have manipulated information asymmetry about the holding value of a bond or a share on the pricing for those who don't have enough information, in order to study stock market bubbles.

Comments and edits: I would take out the sentence: "Presently, researchers use simulation software to conduct their research." This article is about experiments. It seems to me to be a little off topic.

Original text: Social preferences[edit]
Main article: Social preferences
The term "social preferences" refers to the concern (or lack thereof) that people have for each other's well-being, and it encompasses altruism, spitefulness, tastes for equality, and tastes for reciprocity. Experiments on social preferences generally study economic games including the dictator game, the ultimatum game, the trust game, the public goods game, and modifications to these canonical settings. As one example of results, ultimatum game experiments have shown that people are generally willing to sacrifice monetary rewards when offered low allocations, thus behaving inconsistently with simple models of self-interest. Economic experiments have measured how this deviation varies across cultures.

Comments and edits: I would edit this paragraph. I disagree with the second sentence and overall the text could use some updating. The new text might read as follows:
The term "social preferences" refers to a psychological concern that people have for other people's well-being. This includes for instance altruism, inequality aversion, spitefulness, guilt and reciprocity. Since the early 90s it has become apparent that models of human behavior need to incorporate some of the key insights from psychology in order to become more descriptive and accurate. Experimental research played a major role in this development. Social preference theories have been traditionally tested with simple games (and their variations), such as, the dictator game, the ultimatum bargaining game, or the trust game. For instance, the dictator game is a two player game in which one of the subjects is in the role of the dictator and the other in the role of the recipient. The dictator is typically given $10 to split between the two of them. There are no monetary incentives for the dictator to share anything with the other party. Yet, some subjects do share between 10-30% on average. This behavior has been attributed to altruistic preferences. In the ultimatum game, on the other hand, the dictator is now called a "proposer" and the recipient (now the "responder") is not passive - he/she can accept the offer or reject it. If the offer is rejected, then both parties get nothing. In terms of monetary incentives there is no reason for the recipient to turn down any nonzero offer which is why the proposer's should offer the minimal amount (1 or 0 if acceptable). In experiments however proposers routinely offer amount close to the equal split and responders routinely reject offers that are close to zero. This behavior has been partly attributed to reciprocal preferences [e.g., Cox 2004]. Finally the trust game [Berg, Dickhout & McCabe (1995)] differs from the ultimatum game in that the offer made by the proposer is magnified (usually tripled) on the side of the responder. The responder then decides how much of the tripled amount to return back to the proposer. This game has been used to study a positively reciprocal ("gift-exchange") relationship which is thought to be one of the key ingredients of a successful employment relationship between the firm and its workers. Over the years many variations of these games have been used to test theories of psychological motivations [Cooper & Kagel 2009].
Refs. Cox, James C. "How to identify trust and reciprocity." Games and economic behavior 46.2 (2004): 260-281. Berg, Joyce, John Dickhaut, and Kevin McCabe. "Trust, reciprocity, and social history." Games and economic behavior 10.1 (1995): 122-142. Cooper, David, and John H. Kagel. "Other regarding preferences: a selective survey of experimental results." Handbook of experimental economics 2 (2009).

Original text: Methodology[edit]
Guidelines[edit]
Experimental economists generally adhere to the following methodological guidelines:
Incentivize subjects with real monetary payoffs. Publish full experimental instructions. Do not use deception. Avoid introducing specific, concrete context.
Critiques[edit]
The above guidelines have developed in large part to address two central critiques. Specifically, economics experiments are often challenged because of concerns about their "internal validity" and "external validity", for example, that they are not applicable models for many types of economic behavior, so the experiments simply aren't good enough to produce useful answers. Interestingly, however, none of the critiques towards this methodology is specific to it, as they are immediately applicable to either theoretical or empirical approaches or both.[15][citation needed]

Comments and edits:
1. The sentence: "Avoid introducing specific, concrete context." I would change to "UsingPerforming robustness checks (and replications) using different contexts and subject pools." I think experimental literature has slowly abandoned the idea that neutral context is "no context" and that this is particularly useful to study behavior. The literature is moving toward using more natural contexts and frames. The best one can do is try and run different robustness checks.
2. The paragraph on the Critiques I would also rewrite. For example one could have something like this:
One of the critiques of experimental research has to do with the distinction between mis-application of experiment to internal vs. external validity. Roughly speaking internal validity refers to mapping between the theory and an experiment; external validity refers to the mapping between the experiment and a natural setting. Laboratory experiments are a legitimate tool for studying internal validity questions (e.g., testing specific theories of risk aversion). They are questionable when applied to external validity questions (e.g., studying the performance of different unemployment insurance schemes). Field experiments are certainly more appropriate tool for these questions. Other critiques of experiments have involved arguments regarding the type of subjects used (traditionally laboratory experiments are limited to undergraduate students), stakes (being rather low), selection (of those subjects who choose to participate), and experimenter demand effects (a concern that the design of the experiment may be suggestive of behavior or reveal the research objective). These concerns have been recognized in the literature and addressed in number of studies.

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We believe Dr. Vadovic has expertise on the topic of this article, since he has published relevant scholarly research:

Reference : James C. Cox & Maros Servatka & Radovan Vadovic, 2013. "Status Quo Effects in Fairness Games: Reciprocal Responses to Acts of Commission vs. Acts of Omission," Working Papers in Economics 13/25, University of Canterbury, Department of Economics and Finance.

ExpertIdeasBot (talk) 15:30, 24 August 2016 (UTC)[reply]

Dr. Kirchkamp's comment on this article[edit]

Dr. Kirchkamp has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

“Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories,...” → Here I would add that experimental economics might also help generating new theories.
“Economic experiments usually use cash to motivate subjects” → I find this an unnecessary restriction. Perhaps rephrase “...use incentives such as cash...”
“One can loosely classify economic experiments using the following topics:...” → The topics listed here are different from the ones mentioned under Heading 1.
More importantly: I think that one should make at least two lists: One list of economic areas (such as Markets, Game Theory, ...) and one list of methods (Field experiment, Lab experiments,...). Furthermore, I am not entirely satisfied with the position of “Learning experiments”. Perhaps there could be a third list on structures which economists impose on human behaviour (such as Learning, Preferences, Rationality,...) and these structures can be investigated with the help of experiments.
“Overfitting is addressed by...” → I am not sure that such a detailed discussion of overfitting is helpful here. Perhaps a link to the Wikipedia article on overfitting might be sufficient.
“Generality in games...” → “Generality over games...”
“Modern experimental economists have done much notable work recently...” → “The discipline is young...”.
“Roberto Weber has raised issues...” → Here a reference would be helpful.
Section on “Social preferences” → this might better go into a section on methods.
Section “Agent-based computational modeling” → I would drop the entire section. This has little to do with experimental economics.
“Publish full experimental instructions.” → “Make results reproducible, e,g, by publishing experimental instructions”
“Avoid introducing specific, concrete context.” → “As in other fields, also research in experimental economics often starts with the exploration of simple, abstract settings and often moves only gradually to more specific, concrete environments.“

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Reference 1: Mike Farjam & Oliver Kirchkamp, 2015. "Bubbles in hybrid markets - How expectations about algorithmic trading affect human trading," Jena Economic Research Papers 2015-003, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

Reference 2: Marco Faravelli & Oliver Kirchkamp & Helmut Rainer, 2009. "Social welfare versus inequality aversion in an incomplete contract experiment," CRIEFF Discussion Papers 0902, Centre for Research into Industry, Enterprise, Finance and the Firm.

ExpertIdeasBot (talk) 16:05, 24 August 2016 (UTC)[reply]

Dr. Gurerk's comment on this article[edit]

Dr. Gurerk has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I do not know where to put this exciting new development. May be in the "Critiques" Section, as a comment to the ongoing external validity discussion. The editors may decide.
---
Experimental research conducted in virtual reality labs [1] or using VR headsets [2] is a promising new method [3,4] that allows to investigate behavior in naturalistic, field-like immersive virtual environments, without losing any of the advantages of the classic lab studies.
--- References:
[1] DeHoratius, N., Gürerk, Ö., Honhon, D., & Hyndman, K. B. (2015). Understanding the Behavioral Drivers of Execution Failures in Retail Supply Chains: An Experimental Study Using Virtual Reality. Chicago Booth Research Paper No. 15-47. http://doi.org/10.2139/ssrn.2676628
[2] Low-cost headsets boost virtual reality’s lab appeal, Nature 533, 153–154 (12 May 2016) doi:10.1038/533153a
[3] Harrison, G., & Haruvy, E. (2011). Remarks on Virtual World and Virtual Reality Experiments. Southern. Retrieved from http://journal.southerneconomic.org/doi/abs/10.4284/0038-4038-78.1.87
[4] Gürerk, Ö., Bönsch, A., Braun, L., Grund, C., Harbring, C., Kittsteiner, T., & Staffeldt, A. (2016). Experimental Economics in Virtual Reality. Retrieved from https://mpra.ub.uni-muenchen.de/71409/

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We believe Dr. Gurerk has expertise on the topic of this article, since he has published relevant scholarly research:

Reference : Gurerk, Ozgur & Bonsch, Andrea & Braun, Lucas & Grund, Christian & Harbring, Christine & Kittsteiner, Thomas & Staffeldt, Andreas, 2014. "Experimental Economics in Virtual Reality," MPRA Paper 62073, University Library of Munich, Germany, revised 27 Jan 2015.

ExpertIdeasBot (talk) 20:20, 24 September 2016 (UTC)[reply]

Dr. Rosenkranz's comment on this article[edit]

Dr. Rosenkranz has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

A fundamental aspect of the subject is the design of experiments. By designing a controlled economic environment, behavior of individual economic agents, defined by their economically relevant characteristics (preferences, technology, resource endowments, and information) and their home-grown characteristics, can be observed. The design specifies the institution through which agents interact, i.e. the actions available to agents and the outcomes that result from each possible combination of actions.[Friedman, Daniel and Shyam Sunder (1994) Experimental Methods, A Primer for Economists, Cambridge] Experiments may be conducted in the field, in laboratory settings, or web-based [link https://en.wikipedia.org/wiki/Web-based_experiments], regardless of whether individual or group behavior is observed.[3]

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Rosenkranz has expertise on the topic of this article, since he has published relevant scholarly research:

Reference 1: M. Middeldorp & S. Rosenkranz, 2008. "Central bank communication and crowding out of private information in an experimental asset market," Working Papers 08-26, Utrecht School of Economics.

Reference 2: Rosenkranz, Stephanie & Weitzel, Utz, 2008. "Network Structure and Strategic Investments: An Experimental Analysis," CEPR Discussion Papers 6855, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 22:21, 24 September 2016 (UTC)[reply]

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