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Self-interest, Social Wealth, and Competition as a Discovery Procedure : A classroom experiment that makes the "invisible hand" visible

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  • Kirstein, Roland
  • Schmidtchen, Dieter

Abstract

In Economics, as in any social science, empirical tests of theoretical results face a problem: researchers are unable to reproduce the whole economy (or at least its relevant parts) in their laboratories. Nowadays, Experimental Economics uses stylized experiments, drawing on the experience of Psychology, to test at least the basic assumptions of the economic theory of human behavior. Even classroom experiments may serve this purpose. This paper describes a simple classroom experiment that serves as an empirical test of Adam Smith?s invisible- hand hypothesis. Furthermore, it demonstrates to the students that competition acts as a discovery procedure. The experiment is of high didactical value, since the students gain insights into empirical research and experience how markets work. -- Die empirische Prüfung theoretischer Forschungsergebnisse wirft in der Ökonomie - wie bei jeder Sozialwissenschaft ? Probleme auf. Anders als in den Naturwissenschaften können volkswirtschaftliche Problemstellungen kaum in Labors nachgestellt werden. Seit einigen Jahren nutzen Ökonomen allerdings die Erfahrungen der Psychologie mit stilisierten Experimenten, um zumindest ihre grundlegenden Verhaltenshypothesen testen zu können. Dieser Beitrag stellt ein einfaches Hörsaal-Experiment vor, das Adam Smiths Hypothese von der ?unsichtbaren Hand? im Marktgeschehen empirisch überprüft. Das Experiment zeigt zudem, wie Wettbewerb als Entdeckungsverfahren funktioniert, und besitzt hohen didaktischen Wert: Die Studenten erhalten Einblick in empirische Forschung und erleben hautnah das Funktionieren des Marktes.

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Bibliographic Info

Paper provided by Saarland University, CSLE - Center for the Study of Law and Economics in its series CSLE Discussion Paper Series with number 2003-08.

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Date of creation: 2003
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Handle: RePEc:zbw:csledp:200308

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Keywords: Hayek-Hypothesis; Efficiency; Double Oral Auctions;

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  1. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
  2. Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-55, December.
  3. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70, pages 322.
  4. Smith, Vernon L, 1982. "Markets as Economizers of Information: Experimental Examination of the "Hayek Hypothesis"," Economic Inquiry, Western Economic Association International, vol. 20(2), pages 165-79, April.
  5. Bradley J. Ruffle, 2003. "Competitive Equilibrium and Classroom Pit Markets," The Journal of Economic Education, Taylor & Francis Journals, vol. 34(2), pages 123-137, January.
  6. John C. Eckalbar, 2002. "An Extended Duopoly Game," The Journal of Economic Education, Taylor & Francis Journals, vol. 33(1), pages 41-52, January.
  7. Plott, Charles R, 1982. "Industrial Organization Theory and Experimental Economics," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1485-1527, December.
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