Field Experiments with Firms

We discuss how the use of field experiments sheds light on long standing research questionsrelating to firm behavior. We present insights from two classes of experiments: within andacross firms, and draw common lessons from both sets. Field experiments within firmsgenerally aim to shed light on the nature of agency problems. Along these lines, we discusshow field experiments have provided new insights on shirking behavior, and the provision ofmonetary and non-monetary incentives. Field experiments across firms generally aim touncover firms’ binding constraints by exogenously varying the availability of key inputs suchas labor, physical capital, and managerial capital. We conclude by discussing some of thepractical issues researchers face when designing experiments and by highlighting areas forfurther research....