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Experimental Economics

Controlled experiments where participants' behavior is observed to test hypotheses about the influence of the environment (endowments, monetary rewards that motivate exchanges, etc.) and rules on behavior.


Description

Experimental economics consists of controlled experiences where the observed behaviour of the participants is a function of the environment (endowments, monetary rewards that motivate exchanges, etc.) and of an institution (instructions that describe the messages and the procedures of the exchanges). By controlling the variables representing the environments and the institution, the participants’ behaviour is observed when only one variable at time is changed (ceteris paribus condition). The clear advantage of this method is the possibility to isolate the factors that have an influence on the economic behaviour of agents and avoid the ‘noise’ provoked by other factors that coexist in the real life. Economic experiments are typically conducted in a laboratory, as this allows the control of environmental and institutional variables. Participants to these experiences are usually university students. More recently, lab-in-the-field experiences involving local actors and stakeholders in their respective zones become more and more common. Experimental economics has been used for several goals. Roth (1988) identifies three main objectives: 1) test theories; 2) produce facts to identify regularities still unknown and that can integrate economic models; 3) help decision-making, by testing the consequences and implications of the adoption of a new policy tool. In the analysis of behaviour of actors in socio-hydro systems, the main goal of experimental economics is the third, looking for instance at the effectiveness or the acceptability of a local regulation tool for water allocation. Moreover, and in a different register, an economic experience can be used to elicit the risk and time preferences of local farmers when faced with a decision to invest in an innovative irrigation technique.


Productions

Members who used it

Géraldine Abrami , Olivier Barreteau , Bruno Bonté , Emmanuel Dubois , Stefano Farolfi , Philippe Le Coent , Sylvie Morardet