Experimental Economics

"A Classroom Matching Game"
Lisa Anderson (College of William and Mary), Cathleen Johnson, Robert Nelson, Liliana Pasyeka, Ragan Petrie, Nidhi Thakur

"Real Interest Rates and Inflation in the Classroom"
Sheryl Ball (Virginia Tech), Susan K. Laury

"Internet-Based Classroom Experiments"
Charles A. Holt (University of Virginia)

"Double Marginalization: A Classroom Experiment"
Narine Badasyan (Virginia Tech), Jacob K. Goeree, Monica Hartmann, Charles A. Holt, John Morgan, Tanya Rosenblat (Wesleyan University), Maros Servatka, Dirk Yandell

"Teaching Nash Equilibrium and Strategy Dominance: A Classroom Experiment on the Beauty Contest"
Virtudes Alba-Fernandez, Pablo Brañas-Garza (University of Jaén), Francisca Jimenez-Jimenez, Javier Rodero-Cosano

Ricardian Explorer (Wesleyan)

Experimental Economics Workshops/Summer Institutes/Positions/Conferences/Research Funding Announcements (to be updated)

To be updated (posted Sep 18, 2007)

Personal Info---Research---Teaching

Experimental Economics (MGMT 703a / ECON 488a)

Instructor: Shyam Sunder (209, 55 Hillhouse Avenue), 2-6160 (Shyam.sunder@yale.edu)

This seminar is intended to help the participants develop hands-on experience in identifying interesting economics questions, designing and conducting economics experiments and analyzing the data to address those questions. The seminar will meet once a week in two-hour sessions, and will be organized around articles on the topics listed below. We may add or delete topics depending on the interests of the participants.

Besides readings and analysis of published and working papers, participants will design and conduct an experiment of their own to address a research question of their choice. They will write their paper including theory, hypothesis development, design of experiment, instructions, any software, analysis of results, conclusions, and possible further explorations. They will present the results to the class and discuss and defend them.

Course Number: MGMT 703a (PhD) / ECON 488a (Yale College)

When: Fall 2007, Tuesday 1:30-3:20 PM (Yale College), 1:30-4:20 PM (PhD)

Where: Room B-74, 135 Prospect St.

Recommended Books: Kagel and Roth, Davis and Holt, Friedman and Sunder

Instructor email: shyam.sunder@yale.edu, phone 432 6160

TA email: foong soon.cheong @ yale.edu

Student level: Yale College, 1st year PhD, advanced PhD

Number of credits: One (1)

Possible Topics

1. Experimental Method

2. Auctions

3. Industrial Organization

4. Corporate Finance

5. Game Theory

6. Bargaining

7. Asset Markets

8. Expectations and learning in monetary economies

9. Public goods

10. Agency and contracts

11. Structural study of economies using artificial agents

12. Marketing

Guideline Questions to Think About Your Research Experiment

I would like each member of the class to think about a research experiment you would like to do. It would be useful for you to write down answers to the following questions, and then iterate by revising your answers as you think about each question, discuss it with your colleagues and the instructor. Send me your write up at any stage you wish, and feel free to come and talk to me about it.

1. What is the question you would like to have answered after the experiment? (Your answer should be a single sentence with a question mark at the end.)

2. What do you know already about the possible answers to the question you have stated above?

3. What are the various possible ways of finding an answer to the question you have stated above? Include both experimental as well as any other methods you know about.

4. What are the advantages and disadvantages of using an experiment to find an answer?

5. How important is this question to YOU? What are the chances that the answer you get from the experiment will surprise you or others? What are the chances that it will change someone’s mind?

6. How would you conduct the experiment? (Write down a design and instructions.)

7. Is your experimental design the simplest possible design to help answer the question you have stated?

8. What are the possible outcomes of the experiment? Do the possible outcomes include at least one outcome that will answer the question you stated above? What is the chance that you will observe this outcome?

At any stage of your thinking, feel free to go back and revise your earlier answers if you wish to.

Schedule for Fall 2007

	Session	Subject	Graduate Students Presentation	Demonstration/Experiment by	Location
1	Sep 11, 2007	Double Auction Demo Design and Data, September 11, 2007 (Excel Workbook)		Instructor	B-74

2	Sep 18, 2007	First Price, Second Price, and Common Value Auctions, September 18, 2007 (Excel Workbook) Gode, Dhananjay K. and Shyam Sunder, “Allocative Efficiency of Markets with Zero Intelligence Traders: Market as a Partial Substitute for Individual Rationality”, The Journal of Political Economy, Vol. 101, No. 1 (February 1993), 119-137.	Presentation by Ammara Mahmood · Isaac, R. Mark and Vernon L. Smith. 1985. “In Search for Predatory Pricing,” Journal of Political Economy. 93: 320-45. · Slides	Instructor	B-74

3	Sep 25, 2007	IPO Experiment by Panos Jay R. Ritter & Ivo Welch, “A Review of IPO Activity, Pricing, and Allocations”, The Journal of Finance, Volume 57 Issue 4 Page 1795-1828, August 2002. Plott and Sunder (1982) Experiment, September 25, 2007 (Excel Workbook) Plott, Charles R. and Shyam Sunder, “Efficiency of Controller Security Markets with Insider Information: An Application of Rational Expectation Models,” Journal of Political Economy, Vol. 90, No. 4 (August 1982), pp. 663-698.	Presentation by Boudhayan Sen · John H. Kagel and Alvin E. Roth, “Dynamics of Reorganization in Matching Markets: A Laboratory Experiment in Motivation by a Natural Experiment,” Quarterly Journal of Economics (February 2000): 201-235. · Slides	Instructor	B-74

4	Oct 2, 2007	Public Goods Contribution Experiment, October 2, 2007 (Excel Workbook) Public Goods Contribution Experiment, October 2, 2007 (Trade) (Excel Workbook) z-Tree program (for the demo on Double Auction) Presentation by Panos (IPO) · Slides · Z-tree code – pending Hamada K. and Shyam Sunder, “Why Do Economists Favor Free Trade but Politicians Don’t?”. F. A. Hayek, “The Use of Knowledge in Society”, The American Economic Review, Vol. 35, No. 4. (Sep., 1945), pp. 519-530.	Presentation by Jong Min Kim · Elizabeth Hoffman, Dale J. Menkhaus, Dipankar Chakravarti, Ray A. Field, Glen D. Whipple, “Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef”, Marketing Science, Vol. 12, No. 3 (Summer, 1993). · Results, Slides	Instructor	B-74

5	Oct 9, 2007	Design of Experiments (pdf, ppt)	Presentation by Gabriel Rosenberg · Charles B. Cadsby, Murray Frank, Vojislav Maksimovic, “Pooling, Separating, and Semiseparating Equilibria in Financial Markets: Some Experimental Evidence”, The Review of Financial Studies, Vol. 3, No. 3. (1990), pp.315-342. · Rules, Slides		B-74

6	Oct 16, 2007	Experiment by Brian Goldsmith and Alexey Rylov	Presentation by Doug Chung · Bloomfield, O’Hara and Saar, “The “make or take” decision in an electronic market: Evidence on the evolution of liquidity”, Journal of Financial Economics, Volume 75, Issue 1, January 2005, Pages 165-199. · Slides, Results		B-74

7	Oct 23, 2007	Experiment by Wei Zhong Zhang (Michael)	Presentation by Wei Zhong Zhang (Michael) · Kachelmeier and Shehata, “Internal Auditing and Voluntary Cooperation in Firms: A Cross-Cultural Experiment”, The Accounting Review, Vol. 72, No. 3. (Jul., 1997), pp. 407-431. · Slides, Results		B-74

8	Oct 30, 2007	Experiment by Wing Sze Hung (Cecilia) and Danye Wang Experiment by Shi Jia (Jayson) and Kunal Patel	Presentation by Philip Ostromogolsky · Holt and Sherman, “Classroom Games: A Market for Lemons”, The Journal of Economic Perspectives, Vol. 13, No. 1. (Winter, 1999), pp. 205-214. · Slides, Data		B-74

9	Nov 6, 2007	Experiment by Samuel Yellen and Hassaan Khan Experiment by Doug Chung	Presentation by Wei Zhong Zhang (Michael) · Slides, Program		B-74

10	Nov 13, 2007	Experiment by Jong Min Kim Experiment by Philip Ostromogolsky	Experiment by Gabriel Rosenberg		B-74
	(Fall Recess)