Table of Contents 2
1. The Beginning of Experiments in Economics 3
2. Why and When Experiments in Economics Became Interesting 4
3. Different kinds of Experiments in Economics 5
4. Usefulness of Experimental Economics 6
Experimental economics has been the protagonist of one of the most stunning methodological revolutions in the history of science. In recent years the pace of economic experimentation has greatly accelerated. ‘From the early 1970s the number of papers has grown from two or three per year to numbers approximating 100 per year. The number of researchers has grown from a small handful in the early 1970s to hundreds’ (Plott, 1991: 901 and Guala, 2005: 2-3). Economists use experiments, by themselves or in combination with field observation, to test existing theories, investigate puzzling phenomena - sometimes unguided by theory - and to evaluate policies, private or public (See Roth, 1987: 2 and Roth, 1986).
However, because, nowadays, the body of experimental economics is too vast for a short review (McAdams, 1999), the main focus of this essay will be on finding an answer to the question: “if experiments in economics are useful?”
1. The Beginning of Experiments in Economics
It has been part of the folklore of economics that it is a non-experimental science. Economists have been employing experimental methods for at least 60 years. However, some would say that experiments in economics date back much further than this. For instance, Roth (1988) cites Bernoulli (1738) as an early example of ‘informal’ experimentation in economics. Even so, Starmer (1997) argues that, when looking to the first half of these, approximately, 60 years, the experimental method played a very peripheral role in empirical economics. Experiments were quite rare, often conducted in a rather informal manner (relative to contemporary standards), and most likely... [continues]
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