In this course, we lecture on experimental methods of testing economic theoretical predictions. The course is divided into three main topics: "Market," "Game," and "Mechanism Design." For each topic, we begin with an experiment followed by an explanation of the economic theoretical predictions in the experiment. Finally, each group of students is asked to analyze the experimental data and give a presentation of the analysis.
In economics, in order to analyze several economic phenomena, a human being is assumed to be a "homo economicus" that is rational and selfish. However, human beings in reality may not be so rational or selfish as is typically assumed. For example, some people may envy the wealthy, while some may feel sympathy towards those not as fortunate. On the other hand, a "homo economicus" is free of such feelings and cares only about his/her own interest.
Such difference between a "homo economicus" and a human being in reality may cause a big gap between theoretical predictions and economic phenomena in reality. Conducting economic experiments is crucial in grasping the extent of this gap. The purpose of this class is for students to develop the viewpoint of comparing the economic theory and reality through economic experiments.
At the end of this course, students will be able to:
(1) Conduct an economic experiment by themselves.
(2) Analyze and interpret the experimental data.
(3) Compare the experimental results with the economic theoretical predictions.
Economic Experiment, Market, Equilibrium, Behavioral Game Theory, Mechanism Design
|✔ Specialist skills||Intercultural skills||✔ Communication skills||✔ Critical thinking skills||✔ Practical and/or problem-solving skills|
The course is divided into three main topics: "Market," "Game," and "Mechanism Design." For each topic, we begin with an experiment followed by an explanation of the economic theoretical predictions in the experiment. Finally, each group of students is asked to analyze the experimental data and give a presentation of the analysis. Students must attend the first class to determine the group assignments.
|Course schedule||Required learning|
|Class 1||Market (1) Market Experiment||Explain how to conduct a market experiment|
|Class 2||Market (2) Market Equilibrium (Theory)||Explain the theory of a market equilibrium|
|Class 3||Market (3) Stability of Market Equilibria (Theory)||Explain the theory of the stability of market equilibria|
|Class 4||Market (4) Exercise||Solve the exercises on the theory of a market equilibrium|
|Class 5||Market (5) Feedback on the Market Experiment||Analyze the data on the market experiment|
|Class 6||Behavioral Game Theory (1) Game Experiment||Explain how to conduct a game experiment|
|Class 7||Behavioral Game Theory (2) Inequality Aversion (Theory)||Explain the theory of inequality aversion|
|Class 8||Behavioral Game Theory (3) Reciprocity (Theory)||Explain the theory of reciprocity|
|Class 9||Behavioral Game Theory (4) Exercise||Solve the exercises on behavioral game theory|
|Class 10||Behavioral Game Theory (5) Feedback on the Game Experiment||Analyze the data on the game experiment|
|Class 11||Mechanism Design (1) Mechanism Experiment||Explain how to conduct a mechanism experiment|
|Class 12||Mechanism Design (2) Dominant Strategy Implementation (Theory)||Explain the theory of dominant strategy implementation|
|Class 13||Mechanism Design (3) Nash Implementation (Theory)||Explain the theory of Nash implementation|
|Class 14||Mechanism Design (4) Exercise. (5) Feedback on the Mechanism Experiment.||Solve the exercises on mechanism design. Analyze the data on the mechanism experiment.|
To enhance effective learning, students are encouraged to spend approximately 100 minutes preparing for class and another 100 minutes reviewing class content afterwards (including assignments) for each class.
They should do so by referring to textbooks and other course material.
No textbook is set. All materials used in this class can be accessed using the OCW.
All materials used in this class can be accessed using the OCW.
Students' knowledge of experimental economics will be assessed. Exams 60%, reports and exercise problems 40%.
Students must have successfully completed Microeconomics (I and II) and Noncooperative Game Theory or have equivalent knowledge.