This simple classroom experiment demonstrates the existence of starting point bias. Asked to place a dollar value on a non-market good such as the loss of a limb or the destruction of a wetland, students place a much smaller value on the loss if a small value is first suggested by the questioner...

This paper reports the results of three experiments on the neoclassical theory of consumer behavior. All these experiments were performed with the aim to simulate as closely as possible the behavior of consumers in the real world. Real goods, real money and the same incentives as in the real...

We report the results of an experimental analysis of monetary policy decision-making under uncertainty. A large sample of economically literate students from the London School of Economics played a simple monetary policy game, as both individuals and committees of five players. Our findings -...

In this paper we present results from experimental asset markets and simulations with traders who receive asymmetric information about the fundamental value of an asset. In the experimental markets with repetition insiders outperform the market and uninformed computerized random traders...

Recently, it has been argued that the evidence in social science research suggests that deceiving subjects in an experiment does not lead to a significant loss of experimental control. Based on this assessment, experimental economists were counseled to lift their de facto prohibition against...

The trust building process is basic to social science. We investigate it in a laboratory setting using a novel multi-stage trust game where social gains are achieved if players trust each other in each stage. And in each stage, players have an opportunity to appropriate these gains or be...

This paper presents the results of an experiment performed to test the properties of an innovative bargaining mechanism (called automated negotiation) used to resolve disputes arising from Internet-based transactions. Automated negotiation is an online sealed-bid process in which an automated...

The Hayek Hypothesis holds that prices contain enough information to direct the resources in the economy to their most efficient use. In a series of experiments, Vernon Smith [1987] found that with the right trading institutions, a market with agents that know only their own valuations of a good...

We present results of an experiment on expectation formation in an asset market. Participants to our experiment must provide forecasts of the stock future return to computerized utility-maximizing investors, and are rewarded according to how well their forecasts perform in the market. In the...

Notwithstanding the recognized importance of traders’ expectations in characterizing the observed market dynamics, for instance the formation of speculative bubbles and crashes on financial markets, little attention has been devoted so far by economists to a rigorous study of expectation...