Economic experiments

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A common tool used in the economics classroom is the economic experiment. Economic experiments can range from online games to in-class demonstrations. Oftentimes economic concepts can come across a vague or confusing when they are merely presented in the abstract. Economic experiments allow students to investigate concepts themselves, which can be benefiial in promoting a greater understanding of the economic principles.

How to implement an experiment

Economic experiments are interactive activities in which students either individually or in groups investigate a economic question. Similar to the more well-known science experiments, students form a hypothesis about how a situation will play out and then collect data to test that hypothesis. The instructor's purpose is to provide students with resources to collect data and to help students form questions that are interesting and informative, but still testable in a classroom setting. The instructor also acts as resource for interpreting the data and drawing the students' attention to interesting results

Depending on the goal of the course, an instructor can use economics experiments in a couple different ways. The first option is a pre-planned experiment chosen by the instructor. Many economists and professors have developed experimental procedures to be used in classrooms to teach certain concepts. The newsletter Games Economics Play provides an extensive list of economic experiments for both macroeconomic and microeconomic lessons. One experiment (Number 156) teaches students about adverse selection through a simulated insurance market where the students act as high- or low-risk buyers and sellers. There are two scenarios: full-information about risk preferences and partial-information about risk preferences. This game demonstrates how asymmetric information distorts markets. Pre-planned experiments allow the professor some control over the take away lesson of the experiment and are useful when one wants to use an experiment as a supplement to a lesson.

However, economics experiments can not only be used as a supplement for teaching a concept, but can also be used to teach students about the experimental method in economics. Professors can give students the assignment of designing and carrying out an experiment as a project for the course. This works best as a semester-long projects so that students have time to develop a question, design a methodology, implement the study, and analyze the data they collect. The instructor can give some parameters on the topic of the experiment (e.g., it must relate to risk aversion), and would work with the students to ensure that their project's scope is reasonable given the time and resource restraints. This teaching method allows the students greater interaction with the material and provides valuable research methodology experience. However, it may not be suitable for a large class and the outcomes of experiments will depend partially on the quality of the students' designs which may give the professor less control over how well the students' findings match up with the course content.

Other resources for teaching with economic experiments

1. Carleton College's teaching resources for economists [1] gives tips on how professors can prep lessons involving economic experiments. For example, they recommend using experiments for topics that are typically thought of as "boring" to grab the students interest more.

2. A list of books and articles on 'Using Economic Experiments' [2]

3. Econ Port is an online database on teaching economics using experiments. This site contains a very helpful list of frequently asked questions about how to implement an experiment in the classroom well.

4. A list of economic experiments that a student can run online [3]