Economics consists, in part, of theories about human behavior.  These theories and the tools of analysis associated with them are useful because they enable us to predict and better understand behavior.  They are useful, however, only to the extent that they enable us to predict reasonably accurately.   The theories and tools you learn about in this class have been rigorously and extensively tested and used successfully and, thus, are presented to you as a part of the accepted body of knowledge of Economics.  For example, we can successfully predict that when the price of a product declines, other things remaining unchanged, consumers will buy more of that product.  We even give this a name, the Law of Demand, because we are so certain of its reliability.

An important part of any science is the testing of theories.  That’s what laboratory experiments do.  But, while physical scientists can work in a lab by changing and manipulating physical elements, social scientists have more difficulty testing their theories by manipulating human beings.  Experimental economics, however, attempts to do just that by placing people in particular situations and observing how they behave when faced with changes in circumstances affecting their decisions.

This semester you will do experimental economics by being both a participant and observer.  You will be asked to make decisions based on information provided to you and then to draw conclusions from the information collected from you and the other members of the class.  We will ask, “How do the results of our experiments compare with the predictions of standard economic theory?”   In this way we will better understand the theory and its usefulness.

Participation in the experiments will require several steps:

 1. Read about the experiment and do the appropriate warm-up exercises.  This must be done prior to the experiment.
 2. Participate in the experiment.  This involves engaging in the activities of the experiment and recording the results of the experiment.
 3. Complete the lab report and homework questions.  The homework questions will ask you to draw conclusions from the information you have collected in the experiments.

All of our experiments will be done during regularly scheduled class periods.  All steps must be completed at the assigned time.  Credit will not be granted if all components are not completed or for late submissions.  Experiments cannot be completed individually or repeated.