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Economics in the Laboratory


  • Vernon L. Smith


The questions addressed in this paper include: What is a laboratory experiment? What are the reasons why economists conduct such experiments? What have we learned? Among the many findings of experiments are included: institutions (the rules of exchange) matter; optimization in markets is not achieved by conscious calculation; less information is sometimes better; common information is not sufficient to yield common 'knowledge' or expectations; underrevelation is compatible with efficiency; and fairness is a matter of tastes or expectations. Also discussed is the methodological role of experiments in contributing to our knowledge of how things work.

Suggested Citation

  • Vernon L. Smith, 1994. "Economics in the Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 113-131, Winter.
  • Handle: RePEc:aea:jecper:v:8:y:1994:i:1:p:113-31 Note: DOI: 10.1257/jep.8.1.113

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    References listed on IDEAS

    1. Jamie L. Brown-Kruse, 1991. "Contestability in the Presence of an Alternate Market: An Experimental Examination," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 136-147, Spring.
    2. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, vol. 81(5), pages 1096-1136, December.
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    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D00 - Microeconomics - - General - - - General


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