ECO 7391-002: Experimental Economics

Fall, 2007
Thursday, 2:30-5:15pm
SOM 2.903

Professor Rachel Croson

2.514 Green Hall
crosonr@utdallas.edu
972-883-6016

Introduction

Experimental Economics is a new subfield of economics, designed to address economic

questions using controlled experiments. Researchers use experimental methods to test
economic theories which are difficult to examine empirically (e.g. game theory), to
testbed policies being considered by policymakers (e.g. antitrust regulation) and to
examine anomalies previously observed in empirical or theoretical literature (e.g.
preference reversals).

This seminar is designed to introduce PhD students to the field of Experimental

Economics. The first half of the course will be primarily lecture-based, and will provide
a broad overview of past research in the field. In the second half of the course, students
will choose a particular area of interest, and develop and present a more in-depth review
of previous research in that area. At the end of the course, students will produce a paper
proposing an original and publishable research topic in the field.

Textbooks

There are three required textbooks for this class

Experimental Economics: Douglas Davis and Charles Holt. Princeton University Press, 1992.

The Handbook of Experimental Economics: John Kagel and Alvin Roth (eds). Princeton
University Press, 1995.

Experimental Methods: A Primer for Economists: Daniel Friedman and Shyam Sunder.
Cambridge University Press, 1994.

In addition there is one optional textbook

Experiments in Economics: John Hey. Basil Blackwell Press, 1991.

 Requirements

This course involves a heavy reading load. In the beginning of the course students read
surveys of the various subfields and one or two original papers per week, toward the end
they read a series of original research papers (both published and unpublished) related to
their field of interest. At the end of the course, students will produce a paper proposing an
original and publishable research topic in the field

Students are evaluated based on four deliverables.

(1) Seven written referee reports (20%): In each of seven classes, students will
choose an original paper to read and to write up. The written reports should be
relatively short 1-2 pages, and should not include a summary of the paper itself.
Instead, students should focus on shortcomings of the paper, and suggest more
research that should be done to nail down or further explore the results presented.
These reports thus should be critical, as though the student were writing to the
author, identifying holes in the paper, and recommending ways to fix them.
(2) Seven presentations of referee reports (10%): In each of the seven classes,
students will present their referee report to the class. This presentation may
include a summary of the paper, as well as the paper’s limitations and suggestions
for addressing them.

(3) Z-Tree assignment (20%): Toward the end of the class each student will be
expected to learn Z-Tree, a computer program which can be customized for
running experiments. Mastering the program should take 1-2 days. Students will
be expected to program a sample experiment, and demonstrate their program to
the professor (and possibly to the class, if time permits).

(4) Final paper (50%): At the end of the course students will be expected to write
and present a final paper. This paper should be a publishable experimental paper,
up to but not including the experimental results. The paper should thus include
an introduction / motivation section, a literature review, a section on experimental
design and implementation and (if possible) a link to an appropriate Z-tree
program. Students will schedule meetings with a “research buddy,” another
student in the class to get feedback on their initial ideas, as well as a meeting with
Professor Croson to further refine their plan before finalizing their papers.
 Schedule of Classes

August 16: Introduction and Overview of Field

Reading: Chapter 1: Handbook of Experimental Economics
Chapter 1: Experimental Economics
Chapter 1, 9: Experimental Methods

August 23: Methodology: How to Run Experiments

Reading: Chapters 2, 3, 4 and 6: Experimental Methods
Sections 9.3, 9.4: Experimental Economics
Croson (2005) The Method of Experimental Economics
Harrison and List (2004) Field Experiments

August 30: Markets: Product and Asset

Reading: Chapters 5, 6: Handbook of Experimental Economics
Chapters 3, 4: Experimental Economics
+1 original article
September 6: Auctions
Reading: Chapter 7: Handbook of Experimental Economics
Sections 5.6-5.9, App A5: Experimental Economics
+1 original article

September 13: Public Goods

Reading: Chapter 2: Handbook of Experimental Economics
Chapter 6 (except 6.7): Experimental Economics
+1 original article

September 20: Game Theory

Reading: Chapters 3 (section II), 4: Handbook of Experimental Economics
Sections 2.5-2.7, App A2.5, 5.1-5.5: Experimental Economics
+1 original article

September 27: Individual Decision Making

Reading: Chapter 8: Handbook of Experimental Economics
Sections 2.1-2.4, Chapter 8 (+ App): Experimental Economics
+1 original article

October 4: Political and Policy-Related Experiments

Reading: Sections 6.7, 7.7: Experimental Economics
+1 original article

October 11: Behavioral Finance

Reading: “A Survey of Behavioral Finance.” Barberis and Thaler
+1 original article

October 18, 25, November 1: Individual meetings

z-Tree tutorial and assignment
Research Buddy meetings
Professor Croson meetings

Nov 8, 15 Student Presentations

readings to be assigned