Experimental Economics

Definition of Experimental Economics
     Economic theory is often tested using data from natural markets. In many cases, clear conclusions about theoretical propositions can be drawn by observing naturally occurring data. At other times, however, this is more complicated. Data may not be available or may be confounded by outside factors. Economic experiments offer economists an opportunity to test theoretical propositions in a controlled laboratory environment. Three main types of economic experiments include market, game, and individual-decision making experiments. Market experiments focus on the predictions of neoclassical price theory while game experiments test behavior predicted by game theory. Individual decision-making experiments test the effects of outside, random influences on individual decision-making (Davis and Holt 1993). Historically, the majority of economic experiments have been held in laboratories. However, field experiments or experiments conducted in the market place are increasingly being used as well.

     At the University of Wyoming, the Department of Agricultural and Applied Economics experimental economics program is constantly evolving. To date, we have used experimental economic methods to study market outcomes under alternative trading institutions, methods of delivery, and public information scenarios;  effects of alternative market structures in the livestock industry; consumer values of credence attributes; consumer time and risk preferences; family economic behavior; ex-ante evaluation of agricultural policy; land conservation and habitat preservation; and much more.  We also enjoy using experimental economics to teach students about economic theory and individual behavior in the classroom. We look forward to using our newly installed experimental economics laboratory to expand our fields of inquiry in the future. Graduate students in our department are encouraged to use this new facility for their thesis research projects.