In this paper we report the results of an experiment designed to study the behavior of a laboratory macroeconomy with two stable steady states. The economy has the structure of an optimal growth model in which resources are allocated between consumption and investment over a sequence of time...

This paper describes the design and behavior of an experimental economy with the structure of the Ramsey-Cass-Koopmans model of optimal growth. The experiment includes three different implementations of the model: a decentralized implementation with multiple agents and a market for capital, a...

AbstractThis paper studies a laboratory economy with some of the prominent features of an international economic system. The patterns of trade and output predicted by the law of comparative advantage are observed evolving within the experimental markets. Market prices and quantities move in the...

AbstractThis paper reports the first experiments designed to explore the behavior of economies with prominent features of international finance. Two "countries," each with its own currency, were created. International trade could take place only through the operation of markets for currency. The...

Trust is fragile. It is hard to build but easy to destroy. In this paper, we explore the fragility of trust in a stylized laboratory environment. We ask whether transgression outside a direct send-and-return relationship destroys trust and, if so, whether a competition against outsiders or an...