Starting Point: Teaching and Learning Economics > Teaching Methods > Classroom Experiments > Classroom Experiments in Economics


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When things get boring in a chemistry class the instructor can always blow something up. Classroom experiments give economists the same ability to help their students experience the principles they are learning in class that a lab does for a chemistry instructor - minus the risk of setting the classroom on fire.

From a student's point of view, an economics class can seem more technical and theoretical than what they might expect. For some students this is a big "turn off" and will make the entire subject of the course seem less interesting. Experiments let students connect theories to real world markets and decision making environments. This makes the course topics more interesting to the students as well as easier to learn.

Some specific details you'll need to think about for Economics Experiments


Where to Find Experiments in Economics

History of Experiments in Economics

Economics has not traditionally been thought of as a laboratory science. Chamberlin (1948) conducted the first classroom experiments, which were designed to demonstrate that markets are not efficient. He gave his graduate students cards with numbers on them and told some they were buyers and others sellers. The students were to mill around the room and bargain with each other with sellers trying to sell for a number above that on their card and buyers trying to buy for a number below that on their card. One of his students, Vernon Smith, was the first to demonstrate that a market structure that allowed traders better information about the decisions others were making did lead to efficient market outcomes. Smith eventually won the 2002 Nobel Prize in Economics for this work.

Find out about the differences between research and teaching experiments

What Happens in an Economics Experiment?

As a social science, economics studies the decisions and interactions of real people. Classroom experiments put students into the economic environment being studied so that they can experience economic forces at work. This makes economics experiments slightly different than labs conducted in other science courses - the students themselves are the critical ingredients in the experiments rather than an animal that is to be dissected or chemicals that will react. They react to the incentives they face in the experiment and their decisions produce the data through which hypotheses can be tested. All sorts of economic environments can be studied using classroom experiments including bargaining, risky decision making, buying and selling in markets, cartel behavior, contributions to public goods, production of negative externalities and many more. Most topics in a microeconomics principles course and many topics in a macroeconomics principles course can be illustrated using experiments.

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For example, students who participate in a market experiment may be sellers who are given information about their production costs and are asked to make decisions about how many units of their goods to sell and at what cost. Either students or instructors may actually conduct the experiment, but the students' decisions are the data that are ultimately analyzed and discussed in class. Students watch the competitive equilibrium develop, not as the intersection between two lines, but as part of a process in which they are participants. Just as laboratory experiments give researchers a way of testing theories, classroom experiments can be used students test their own ideas about how things work.

Since, in most economics experiments it is important to pass individual information back and forth, the ideal classroom environment for is probably a traditional classroom setting with tables in the classroom, 30 or fewer students enrolled and at least an hour for class. Fortunately there are a lot of strategies you can use to Make it Work if your classes are less than ideal.

Why Do Experiments Matter?

Sometimes the outcome of the experiment does not perfectly match the prediction of standard economic theory. This can provide an interesting avenue of exploration, especially for students in classes beyond the freshman level. It provides a way of thinking more deeply about economic theory. For example, students often find it difficult to think critically about whether economic theories are correct. Experiments can provide a structure that helps them see that one of the assumptions of the model are not quite right and to think about whether it is possible to create a better model.

Experiments are also useful ways of producing data that can give students "real data" to analyze using data analysis techniques they are learning.

Classroom experiments have also been shown to improve classroom outcomes in a number of ways, including student performance on exams and increasing positive teaching evaluations.

find examples of Classroom Experiments in Economics

Some specific details you'll need to think about for Economics Experiments

References


Chamberlin, Edward H. (1948) An experimental imperfect market. Journal of Political Economy 56: 95-108.



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