EXPERIMENTAL ECONOMICS
Fall 2012
Syllabus
(available as a website with links by unzipping the attached file)
This is a graduate-level topics course in Experimental Economics, with a focus on
laboratory experiments. The aim is to expose students to multiple potential research
topics and related literature. Hands-on participation in in-class experiments will be an
integral part of the course. Basic background in Microeconomic Theory and Game
Theory is assumed.
Instructor:
Peter Katuščák: Peter.Katuscak@cerge-ei.cz, office hours by
appointment
Lectures:
Thu, 8:30-10:05, Fri, 8:30-11:50, in room S6
Dates: Oct. 25-26, Nov. 1-2, Nov. 22-23, Dec. 6-7
Laboratory Sessions:
Thu, 12:50-15:20, Fri, 12:50-14:30, in VT5
Dates: Oct. 25-26, Nov. 1-2, Nov. 22-23, Dec. 6-7
Announcements:
Principal Texts:
• Holt, Charles A., Markets, Games, and Strategic Behavior, PearsonAdison
Wesley, 2007.
Further Suggested Readings (available from the CERGE-EI
Library):
• Camerer, Colin, Behavioral Game Theory, New York, Russell Sage
& Princeton University Press, 2003.
• Friedman, Daniel and Alessandra Cassar, Economics Lab: an
Intensive Course in Experimental Economics, Routledge, 2004.
• Kagel, John and Alvin Roth, Handbook of Experimental
Economics, Princeton, 1995.
• Smith, Vernon L., Rationality in Economics, Cambridge University
Press, 2008.
Term Project and Grades:
There will be no exams in this class. The course grade will be based on class participation
(20%) and a term project to be delivered by email to Peter Katuščák by January 15, 2013.
In this project, a student should outline a research question to be addressed by laboratory
experimental economic methods, review the literature, propose a detailed experimental
design, outline hypotheses to be tested and discuss how these hypotheses will be tested.
Topics:
PART I: LAB EXPERIMENTS (PETER KATUŠČÁK)
Lecture notes for this part of the course can be downloaded by clicking on the appropriate
link.
1. Introduction and Methodology
2. Other-regarding Preferences
• Dictator game
• Ultimatum game
• Understanding other-regarding preferences
3. Preference and Belief Elicitation
• Willingness-to-pay elicitation
• Belief elicitation
• Risk aversion elicitation
• Elicitation of other-regarding preferences
• Elicitation of attitudes toward competition
4. Trust, Reciprocity and Principal-Agent Games (skipping)
• Trust game
• Reciprocity game
• Principal-agent game
5. Cooperation (skipping)
• Prisoners‘ Dilemma
6. Coordination
• Battle of the Sexes
• Minimum effort game
7. Guessing
• Guessing (beauty contest) game
8. Public Goods
• Voluntary contributions game
• Voluntary contributions with punishments
• Provision-point mechanism
9. Auctions
• Overview of auction formats
• Independent private values: English, Dutch, first-price sealed-bid and secondprice
sealed-bid auctions
• Common values: first-price sealed-bid
10. Financial Markets
• Multi-unit double-auction:
• Stock-market, bubbles
• Prediction market
Reading List:
Readings denoted by asterisk will be discussed in class. Other readings are for student
reference. Further readings may be assigned for in-class discussion during the course of
the semester.
1. Introduction and Methodology
*Holt, chapter 1. (pdf
)
Hertwig, Ralph and Andreas Ortmann. “Experimental Practices in Economics: A
Methodological Challenge for Psychologists?” Behavioral and Brain
Sciences, 2001, 24(3), pp. 383-402. (pdf)
Kahneman, Daniel. “Maps of Bounded Rationality: Psychology for Behavioral
Economics.” American Economic Review, 2003, 93(5), pp. 1449-1475. (pdf)
Rabin, Matthew. “Psychology and Economics.” Journal of Economic Literature,
1998, 36(1), pp. 11-46. (pdf)
Roth, Alvin E. "The Early History of Experimental Economics." Journal of the
History of Economic Thought, 1993, 15(2), pp. 184-209. (pdf)
Roth, Alvin E. "Lets Keep the Con out of Experimental Econ.: A Methodological
Note." Empirical Economics, 1994, 19(2), pp. 279-289. (pdf)
Samuelson, Larry. “Economic Theory and Experimental Economics.” Journal of
Economic Literature, 2005, 43(1), pp. 65-107. (pdf)
2. Other-Regarding Preferences
a. Dictator, Ultimatum and Bargaining Games
*Holt, chapter 12 (pdf)
Binmore, Ken. “Economic Man or Straw Man? Commentary on Heinrich, et
al.” Behavioral and Brain Sciences, 2005, 28, pp. 815-818. (pdf)
Bornstein, Gary and I. Yaniv. “Individual and Group Behavior in the Ultimatum
Game: Are Groups More “Rational” Players?” Experimental Economics,
1998, 1, pp. 101-108. (pdf)
*Cherry, Todd, Peter Frykblom and Jason Shogren. “Hardnose the Dictator.”
American Economic Review, 2002, 92(4), pp. 1218-1221. (pdf)
*Forsythe, Robert, Joel Horowitz, N.S. Savin and Martin Sefton. “Fairness in
Simple Bargaining Experiments.” Games and Economic Behavior, 1994,
6(3), pp. 347-369. (pdf)
Goeree, Jacob and C. Holt. “Asymmetric inequality aversion and noisy behavior
in alternating-offer bargaining games.” European Economic Review, 2000,
44, pp. 1079-1089. (pdf)
*Guth, Werner, R. Schmittberger and B. Schwartz. “An Experimental Analysis of
Ultimatum Bargaining.” Journal of Games and Economic Behavior, 1982, 3(4),
pp. 367-388. (pdf)
*Hoffman, E., K. McCabe., K. Shachat, and V. Smith. “Preferences, Property
Rights, and Anonymity in Bargaining Games.” Games and Economic
Behavior, 1994, 7, pp. 346-380. (pdf)
*List, John. “On the Interpretation of Giving in Dictator Games.” Journal of
Political Economy, 2007, 115(3), pp. 482-493. (pdf)
*Ochs, Jack and Alvin E. Roth. “An Experimental Study of Sequential
Bargaining. American Economic Review, 1989, 79(3), pp. 355-384. (pdf)
Roth, Alvin E., V. Prasnikar, M. Okunofujiwara and S. Zamir. “Bargaining and
Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An
Experimental Study.” American Economic Review, 1991, 81(5), pp. 1068-
1095. (pdf)
Rubinstein, Ariel. “Perfect Equilibrium in a Bargaining Model.” Econometrica,
1982, 50(1), pp. 97-109. (pdf)
*Slonim, Robert and Alvin E. Roth. “Learning in High Stakes Ultimatum Games:
An Experiment in the Slovak Republic.” Econometrica, 1988, 66(3), pp.
569-596. (pdf)
b. Understanding Other-Regarding Preferences
*Andreoni, James and John Miller. “Giving According to GARP: An
Experimental Test of the Consistency of Preferences for Altruism.”
Econometrica, 2002, 70(2), pp. 737-753. (pdf)
*Bolton, Gary E. and Axel Ockenfels. “ERC: A Theory of Equity, Reciprocity
and Competition.” American Economic Review, 2000, 90(1), pp. 166-
193. (pdf)
*Charness, Gary and Matthew Rabin. “Understanding Social Preferences with
Simple Tests.” Quarterly Journal of Economics, 2002, 117(3), pp. 817-
869. (pdf)
Dufwenberg, M. and G. Kirchsteiger. “A Theory of Sequential
Reciprocity.” Games and Economic Behavior, 2004, 47(2), pp. 268-
98. (pdf)
Falk, Armin and Urs Fischbacher. “A Theory of Reciprocity.” Games and
Economic Behavior, 2006, 54(2), pp. 293-315. (pdf)
*Fehr, Ernst and Klaus Schmidt. “A Theory of Fairness, Competition, and
Cooperation.” Quarterly Journal of Economics, 1999, 114(3), pp. 817-868.
(pdf)
Levine, D. “Modelling Altruism and Spitefulness in Game Experiments.” Review
of Economic Dynamics, 1998, 1(3), pp. 593-622. (pdf)
Li, Jing. “The Power of Convention: A Theory of Social Preferences.”Journal of
Economic Behavior and Organization, 2008, 65(3-4), pp. 489-505. (pdf)
Rabin, Matthew. “Incorporating Fairness into Game Theory and
Economics.” American Economic Review, 1993, 83(5), pp. 1281-1302. (pdf)
Sobel, Joel. “Putting Altruism in Context,” Brain and Behavioral Science, 2002,
25(2), pp. 275-276. (pdf)
Sobel, Joel. “Interdependent Preferences and Reciprocity.” Journal of Economic
Literature, 2005, 43(2), pp. 392-436. (pdf)
3. Preference and Belief Elicitation
*Holt, chapters 4 and 30. (pdf)
Andreoni, James and John Miller. “Giving According to GARP: An Experimental
Test of the Consistency of Preferences for Altruism.” Econometrica, 2002,
70(2), pp. 737-753. (pdf)
*Becker, G.M., Degrooth, M.H., Marschak, J. Measuring Utility by a SingleResponse
Sequential Method. Behavioral Science, 1964, 9(2), pp. 226-232.
*Charness, Gary and Matthew Rabin. “Understanding Social Preferences with
Simple Tests.” Quarterly Journal of Economics, 2002, 117(3), pp. 817-869.
(pdf)
Croson, Rachel and Uri Gneezy. “Gender Differences in Preferences.” Journal of
Economic Literature, 2009, 47(2), pp. 448-474. (pdf)
Fehr, Ernst, Helen Bernhard and Bettina Rockenbach. “Egalitarianism in young
children.” Nature, 2008, 454(28), pp. 1079-1084. (pdf)
*Holt, Charles A. and Susan K. Laury, “Risk Aversion and Incentive
Effects.” American Economic Review, 2002, 92(5), pp. 1644-1655. (pdf)
4. Trust, Reciprocity and Principal-Agent Games
*Holt, chapter 13. (pdf)
Andreoni, James. "Trust, Reciprocity, and Contract Enforcement: Experiments on
Satisfaction Guaranteed." 2005, Working Paper. (pdf)
Andreoni, James, William H. Harbaugh and Lise Vesterlund. “The Carrot or the
Stick: Rewards, Punishments and Cooperation.” American Economic
Review, 2003, 93(3), pp. 893-902. (pdf)
*Berg, Joyce, John Dickhaut and Kevin McCabe. “Trust, Reciprocity, and Social
History.” Games and Economic Behavior, 1995, 10(1), pp. 122-142. (pdf)
Bohnet, Iris, Bruno S. Frey and Steffen Huck. “More Order with Less Law: On
Contract Enforcement, Trust, and Crowding.” American Political Science
Review, 2001, 95(1), pp. 131-144. (pdf)
Cox, James C. “How to Identify Trust and Reciprocity.” Games and Economic
Behavior, 2004, 46(2), pp. 260-281. (pdf)
Engelmann, Dirk and Andreas Ortmann. “The Robustness of Laboratory Gift
Exchange: A Reconsideration.” 2002, Working Paper, CERGE-EI, Prague,
Czech Republic. (pdf)
*Fehr, Ernst, Simon Gachter and Georg Kirchsteiger. “Reciprocity as a Contract
Enforcement Device: Experimental Evidence.” Econometrica, 1997, 65(4), pp.
833-860. (pdf)
*Fehr, Ernst, Georg Kirchsteiger, and Arno Riedl. “Does Fairness Prevent Market
Clearing? An Experimental Investigation.” Quarterly Journal of Economics,
1993, 108(2), pp. 437-459. (pdf)
*Fehr, Ernst, Alexander Klein, and Klaus Schmidt. “Fairness and Contract
Design.” Econometrica, 2007, 75(1), pp. 121-154. (pdf)
Glaeser, Edward L., et al. “Measuring Trust.” Quarterly Journal of Economics,
2000, 115(3), pp. 811-846. (pdf)
Van Huyck, John B.; Raymond C. Battalio and Mary F. Walters. “Commitment
versus Discretion in the Peasant-Dictator Game.” Games and Economic
Behavior, 1995, 10(1), pp. 143-170. (pdf)
5. Cooperation
*Holt, chapter 3.1-2. (pdf)
Andreoni, James. “Warm-Glow Versus Cold-Prickle: The Effects of Positive and
Negative Framing on Cooperation in Experiments.” Quarterly Journal of
Economics, 1995b, 110(1), pp. 1-21. (pdf)
Andreoni, James and Larry Samuelson. “Building Rational
Cooperation.” Journal of Economic Theory, 127, 2006, pp. 117-154. (pdf)
*Andreoni, James and J.H.Miller. “Rational Cooperation in the Finitely Repeated
Prisoner's Dilemma: Experimental Evidence.” Economic Journal, 1993,
103(418), pp. 570-585. (pdf)
Camerer, C., and K. Weigelt. “Experimental Tests of a Sequential Equilibrium
Reputation Model.” Econometrica, 1988, 56(1), pp. 1-36. (pdf)
*Cooper, R., D. DeJong and R. Forsythe “Cooperation Without Reputation:
Experimental Evidence from Prisoner’s Dilemma Games.” Games and
Economic Behavior, 1996, 12(2), pp. 187-218. (pdf)
*Dal Bo, P. “Cooperation under the Shadow of the Future: Experimental
Evidence from Infinitely Repeated Games.” American Economics
Review,2005, 95(5), pp. 1591-1604. (pdf)
*Dawes, Robyn and Richard Thaler. “Anomalies: Cooperation.” Journal of
Economic Perspectives, 1988, 2(3), pp. 187-197. (pdf)
Duffy, John and Jack Ochs. “Cooperative Behavior and the Frequency of Social
Interaction.” Games and Economic Behavior, 2009, 66, pp. 785-812. (pdf)
Ellison, G. “Cooperation in the Prisoner's Dilemma with Anonymous Random
Matching.” Review of Economic Studies, 1994, 61(3), pp. 567-588. (pdf)
Kreps, David, Paul Milgrom, John Roberts, and Robert Wilson. “Rational
cooperation in the finitely repeated prisoners’ dilemma.” Journal of
Economic Theory,1982, 27(2), pp. 245-252. (pdf)
Selten, R. and R. Stoecker. “End Behavior in Sequences of Finite Prisoner’s
Dilemma Supergames: A Learning Theory Approach.” Journal of Economic
Behavior and Organization, 1986, 7(1), pp. 47-70. (pdf)
6. Coordination
*Holt, chapters 3.3 and 26. (pdf)
Ochs, Jack. Coordination. In Kagel and Roth.
Blume, Andreas and Andreas Ortmann. “The effects of costless pre-play
communication: Experimental evidence from games with Pareto-ranked
equilibria.”Journal of Economic Theory, 132, 2007, 274- 290. (pdf)
*Goeree, Jacob and Charles Holt. “An Experimental Study of Costly
Coordination.” Games and Economic Behavior, 2005, 51(2), pp. 349-
364. (pdf)
Cooper, Russell W.,Douglas V. DeJong, Robert Forsythe and Thomas Ross.
“Communication in the Battle of the Sexes Game: Some Experimental
Results.” RAND Journal of Economics, 1989, 20(4), pp. 568-587. (pdf)
Cooper, Russell W.,Douglas V. DeJong, Robert Forsythe and Thomas Ross.
“Selection Criteria in Coordination Games: Some Experimental Results.”
American Economic Review, 1990, 80(1), pp. 218-33. (pdf)
Cooper, Russell W.,Douglas V. DeJong, Robert Forsythe and Thomas Ross.
“Communication in Coordination Games.” Quarterly Journal of
Economics, 1992, 107(2), pp. 739-771. (pdf)
Riedl, Arno, Ingrid Rohde and Martin Strobel. “Efficient Coordination in
Weakest Link Games through Freedom of Partner Choice.” Unpublished
manuscript, 2011a. (pdf)
Riedl, Arno, Ingrid Rohde and Martin Strobel. “Neighborhood Choice and
Efficient Coordination.” Unpublished manuscript, 2011b. (pdf)
Schotter, Andy and Barry Sopher. “Social Learning and Convention Creation in
Inter-Generational Games: An Experimental Study.” Journal of Political
Economy, 2003, 111(3), pp. 498-529. (pdf)
* Van Huyck, John B., Raymond C. Battalio and Richard O. Beil. “Tacit
Coordination Games, Strategic Uncertainty, and Coordination
Failure.” American Economic Review, 1990, 80(1), pp. 234-48. (pdf)
Van Huyck, John B., Raymond C. Battalio and Richard O. Beil. “Strategic
Uncertainty, Equilibrium Selection, and Coordination Failure in Average
Opinion Games.” Quarterly Journal of Economics, 1991, 106(3), pp. 885-
910. (pdf)
Van Huyck, John B., Raymond C. Battalio and Richard O. Beil. “Asset Markets
as an Equilibrium Selection Mechanism: Coordination Failure, Game Form
Auctions, and Tacit Communication.” Games and Economic Behavior,
1993, 5, pp. 485-504. (pdf)
Van Huyck, John B., John M. Wildenthal and Raymond C. Battalio. “Tacit
Cooperation, Strategic Uncertainty, and Coordination Failure: Evidence
From Repeated Dominance Solvable Games.” Games and Economic
Behavior, 2002, 38(1), pp. 156-175. (pdf)
Weber, Roberto. “Managing Growth to Achieve Efficient Coordination in Large
Groups.” American Economic Review, 2006, 96 (1), March, 114-126. (pdf)
7. Guessing
*Holt, chapter 3.4. (pdf)
Moulin, Herve. Game Theory for Social Sciences. New York: New York Press,
1986.
*Nagel, Rosemarie. “Unraveling in Guessing Games: An Experimental Study.”
American Economic Review, 1995, 85(5), pp. 1313-1326. (pdf)
8. Public Goods
*Holt, chapters 14 and 15. (pdf)
Ledyard, John. “Public Goods: A Survey of Experimental Research.” Chapter 2 in
Kagel and Roth (1995).
a. Voluntary Contribution Mechanism
Anderson, Simon P., Jacob K. Goeree and Charles A. Holt. “A Theoretical
Analysis of Altruism and Decision Error in Public Goods Games.” Journal
of Public Economics, 1998, 70(2), pp. 297-323. (pdf)
Andreoni, James. “Why Free Ride?: Strategies and Learning in Public Goods
Experiments.” Journal of Public Economics, 1988, 37(3), pp. 291-304. (pdf)
Andreoni, James. “An Experimental Test of the Public Goods Crowding-Out
Hypothesis.” American Economic Review, 1993, 83(5), pp. 1317-1327. (pdf)
Andreoni, James. “Cooperation in Public Goods Experiments: Kindness or
Confusion?” American Economic Review, 1995a, 85(4), pp. 891-904. (pdf)
*Goeree, Jacob K., Charles A. Holt and S. Laury. “Private Costs and Public
Benefits: Unraveling the Effects of Altruism and Noisy Behavior.” Journal
of Public Economics, 2002, 83(2), pp. 257-278. (pdf)
*Isaac, R. Mark and James Walker. “Group Size Effects in Public Goods
Provision: The Voluntary Contributions Mechanism.” Quarterly Journal of
Economics, 1988a, 103(1), pp. 179-199. (pdf)
Isaac, R. Mark and James Walker. “Communication and Free-Riding Behavior:
The Voluntary Contribution Mechanism.” Economic Inquiry, 1988b, 26, pp.
585-608.
*Isaac, R. Mark, James Walker and Arlingtion Williams. “Group Size and the
Voluntary Provision of Public Goods: Experimental Evidence Utilizing
Large Groups.” Journal of Public Economics, 1994, 54(1), pp. 1-36. (pdf)
*Marwell, Gerald and Ruth Ames. “Economists Free Ride, Does Anyone Else?
Experiments on the Provision of Public Goods, IV.” Journal of Public
Economics, 1981, 15(3), pp. 295-310. (pdf)
Palfrey, Thomas and Howard Rosenthal. “Testing for Effects of Cheap Talk in a
Public Goods Game with Private Information.” Games and Economic
Behavior, 1991, 3(2), pp. 183-220. (pdf)
Palfrey, Thomas and Jeffrey Prisbrey. “Altruism, Reputation, and Noise in Linear
Public Goods Experiments.” Journal of Public Economics, 1996,61(3), pp.
409-427. (pdf)
Palfrey, Thomas and Jeffrey Prisbrey. “Anomalous Behavior in Public Goods
Experiments: How Much and Why?” American Economic Review, 1997,
87(5), pp. 829-846. (pdf)
b. Provision Point
*Bagnoli, Mark and Michael McKee. “Voluntary Contributions Games: Efficient
Private Provision of Public Goods.” Economic Inquiry, 1991, 29(2), pp.351-
366. (pdf)
Bagnoli, Mark, Shaul Ben-David and Michael McKee. “Voluntary Provision of
Public Goods: The Multiple Unit Case.” Journal of Public Economics,
1992, 47(1), pp. 85-106. (pdf)
Davis, Douglas and Charles Holt. Experimental
Economics. Princetion: Princeton University Press, pp. 338-343. (pdf)
*Dawes, Robin, John Orbell, R.T. Simmons and A.J.C. van de Kragt. “Organizing
Groups for Collective Action.” American Political Science Review, 1986,
80(4), pp.1171-85. (pdf)
Rondeau, Daniel, William D. Schulze and Gregory L. Poe. “Voluntary Revelation
of the Demand for Public Goods Using a Provision Point Mechanism.”
Journal of Public Economics, 1999, 72(3), pp. 455-470. (pdf)
Rondeau, Daniel, Gregory L. Poe and William D. Schulze. “VCM or PPM? A
comparison of the performance of two voluntary public goods
mechanisms.” Journal of Public Economics, 2005, 89(8), pp. 1581-1592.
(pdf)
c. Cooperation-Enforcing Institutions: Punishments for Non-Cooperation
*Fehr, Ernst and Simon Gachter. “Coopertion and Punishment in Public Goods
Experiments.” American Economic Review, 2000, 90(4), pp. 980-994. (pdf)
*Gureck, Ozgur, Bernd Irlenbusch and Bettina Rockenbach. “The Competitive
Advantage of Sanctioning Institutions.” Science, 2006, 312, pp. 108-111.
(pdf)
*Kosfeld, Michael, Akira Okada and Arno Riedl. “Institution Formation in Public
Goods Games.” American Economic Review, 2009, 99(4), pp. 1335-1355.
(pdf)
9. Auctions
*Holt, chapters 19 and 21. (pdf)
*Kagel, John. “Auctions.” Chapter 7 in Kagel and Roth.
a. Private-Value Auctions
Anderson, Simon P., Jacob K. Goeree and Charles A. Holt. “Rent Seeking with
Bounded Rationality: An Analysis of the All-Pay Auction.” Journal of
Political Economy, 1998, 106(4), pp. 828-853. (pdf)
Andreoni, James and John H. Miller. “Auctions with Artificial Adaptive
Agents.” Games and Economic Behavior, 1995, 10(1), pp. 39-64. (pdf)
Android, James, Yeon-Koo Che and Jinwoo Kim. “Asymmetric Information
about Rivals Types in Standard Auctions: An Experiment.” Games and
Economic Behavior, 2007, 59, pp. 240-259. (pdf)
*Chen, Yan, Peter Katuscak and Emre Ozdenoren. “Why Can’t a Woman Bid
More Like a Man?”, 2009, working paper. (pdf)
*Filiz-Ozbay, Emel and Erkut Ozbay. “Auctions with Anticipated Regret: Theory
and Experiment.” American Economic Review, 2007, 97(4), pp. 1407-1418.
(pdf)
List, John A. and David Lucking-Reiley. “Demand Reduction in Multiunit
Auctions: Evidence from a Sportscard Field Experiment.” American
Economic Review, 90(4), 2000, pp. 961-972. (pdf)
*Lucking-Reiley, David. “Using Field Experiments to Test Equivalence Between
Auction Formats: Magic on the Internet.” American Economic Review,
1999, 89(5), pp. 1063-1080. (pdf)
Milgrom, Paul. “Auctions and Bidding: A Primer (in Symposia:
Auctions).” Journal of Economic Perspectives, 1989, 3(3), pp. 3-22. (pdf)
Riley, John G. “Expected Revenue from Open and Sealed Bid Auctions (in
Symposia: Auctions).” Journal of Economic Perspectives, 1989, 3(3), pp.
41-50. (pdf)
b. Common-Value Auctions
Kagel, J., R. Harstad and D. Levin. “Information Impact and Allocation Rules in
Auctions with Affiliated Private Values: A Laboratory
Study.”Econometrica, 1987, 55(6), pp. 1275-1304. (pdf)
Kagel, John H. and Dan Levin. “Common Value Auctions with Insider
Information.” Econometrica, 1999, 67(5), pp. 1219-1238. (pdf)
Levin, Dan, John Kagel and Jean-Francois Richard. “Revenue Effects and
Information Processing in English Common Value Auctions.” American
Economic Review, 1996, 86(3), pp. 442-460. (pdf)
*Thaler, Richard H. “Anomalies: The Winner's Curse.” Journal of Economic
Perspectives,1988, 2(1), pp. 191-202. (pdf)
10. Financial Markets
a. Double Auction and Call Market
Chamberlin, E. H. “An Experimental Imperfect Market.” Journal of Political
Economy,1948, 56, pp. 95-108. (pdf)
Friedman, Dan. “How Trading Institutions Affect Financial Market Performance:
Some Laboratory Evidence.” Economic Inquiry, 1993, 31, pp. 410-435.
McCabe, Kevin, S.J. Rassenti and Vernon Smith. “Designing a Uniform-Price
Double Auction: An Experimental Evaluation.” 1993. In D. Friedman and J.
Rust, eds., The Double Auction Market: Institutions, Theory and Evidence,
SFI Studies in the Sciences of Complexity, Proceedings, 15, Reading, MA:
Addison-Wesley.
Smith, Vernon. “An Experimental Study of Competitive Market Behavior.”
Journal of Political Economy, 1962, 70, pp. 111-137. (pdf)
Smith, Vernon. “The Effect of Market Organization on Competitive Equilibrium.”
Quarterly Journal of Economics, 1964, 78, pp. 181-201. (pdf)
Smith, Vernon. “Markets as Economizers of Information: Experimental
Investigation of the Hayek Hypothesis.” Economic Inquiry, 1982, 20, pp.
165-179.
b. Bubbles in Financial Markets
*Holt, chapter 11. (pdf)
*Bostian, A. J., Jacob Goeree and Charles Holt. “Price Bubbles in Asset Market
Experiments with a Flat Fundamental Value.” 2005, working paper. (pdf)
Caginalp, G., David Porter and Vernon Smith. “Financial Bubbles: Excess Cash,
Momentum and Incomplete Information.” Journal of Psychology and
Financial Markets, 2001, 2, pp. 80-89.
Dufwenberg, Martin, Tobias Lindqvist and Evan Moore. “Bubbles and
Experience: An Experiment.” American Economic Review, 2005, 95(5), pp.
1731-1737. (pdf)
Haruvy, Ernan and Charles Noussair. “The Effect of Short Selling on Bubbles and
Crashes in Experimental Spot Asset Markets.” Journal of Finance, 2006,
61(3), pp. 1119-1157.
King, Ronald, Vernon Smith, Arlington Williams and Mark Van Boening. “The
Robustness of Bubbles and Crashes in Experimental Stock Markets.” In
Richard H. Day and Ping Chen, eds., Nonlinear Dynamics and Evolutionary
Economics. Oxford: Oxford University Press, 1993, pp. 183-200.
Noussair, Charles and Steven Tucker. “Futures Markets and Bubble Formation in
Experimental Asset Markets.” Pacific Economic Review, 2006, 11(2), pp.
167-184. (pdf)
Peterson, Steven. “Forecasting Dynamics and Convergence to Market
Fundamentals: Evidence from Experimental Asset Markets.” Journal of
Economic Behavior and Organization, 1993, 22(3), pp. 269-84.
Porter, David and Vernon Smith. “Futures Contracting and Dividend Uncertainty
in Experimental Asset Markets.” Journal of Business, 1995, 68(4), pp. 509-
541. (pdf)
Shleifer, Andrei and Robert Vishny. “The Limits of Arbitrage.” Journal of
Finance, 1997, 52(1), pp. 35-55. (pdf)
*Smith, Vernon, G. Suchanek, & Arlington Williams, “Bubbles, Crashes and
Endogenous Expectations in Experimental Spot Asset Markets.”
Econometrica 1988, 56, pp. 1119-51. (pdf)
Van Boening, Mark, Arlington Williams and Shawn La Master. “Price Bubbles
and Crashes in Experimental Call Markets.” Economic Letters, 1993, 41(2),
pp. 179-185. (pdf)
c. Prediction Markets
*Holt, chapter 34. (pdf)
Berg, Joyce, Robert Forsythe, Forest Nelson and Thomas Rietz. “Results from a
Dozen Years of Election Futures Markets Research.” Handbook of
Experimental Economics Results, 2008, 1, pp. 742-751. (pdf)
Manski, Charles. “Interpreting the Predictions of Prediction Markets.” Economic
Letters, 2006, 91, pp. 425-429. (pdf)
*Wolfers, Justin. “Prediction Markets.” Journal of Economic Perspectives, 2004,
18(2), pp. 107-126. (pdf)
Wolfers, Justin and Eric Zitzewitz. “Interpreting Prediction Market Prices as
Probabilities.” 2006, NBER Working Paper No. 12200. (pdf)