Introduction to Experiments

with Economic Principles

In this course you will learn economics principles by first participating in experimental classroom markets and then studying the related economic theory and applications.   The subject of economics is ideally suited to an experimental approach.  By participating in economic experiments, you will be able to observe economic principles in action.  After you have participated in an experiment and recorded the results, I will present economic theories designed to explain what happened in the laboratory.  With the data collected from the classroom experiments, you can discover how well or how badly each theory works in predicting the experimental outcome. With this motivation, theories come to life and once they seem real, they become interesting.  I expect that in the process you will come  to appreciate the great power and some of the shortcomings of economic theory in explaining the economic world in which we live.

We are using two textbooks for the course.  Our main textbook is  Experiments with Economic Principles  (Second Edition).  It was written by Professor Theodore Bergstrom of UCSB and Professor John Miller of Carnegie Mellon University. It  is the first introductory economics textbook designed to   teach principles of economics by means of experiments. I believe that this method of teaching is superior to the standard lecture method.  I hope that you will agree. The other textbook is Introduction to Economic Analysis   by R. Preston Mcafee.  Professor McAfee's book is  an open access text, available for free online at  www.introecon.com.

You will be reading extensively from both  books.

Because almost nobody reads the prefaces of textbooks (because they are almost never worth reading), let me call your attention here to the preface of Experiments with Economic Principles, which I believe is worth reading.
 

PREFACE

Taking this course in economics-by-experiment is a bit like being dinner guest at a cannibal's house. You may be a diner, you may be the dinner, or you may be both.

If you take a laboratory course in the physical sciences, you get to mix smelly chemicals, or monkey with pulleys, or dissect a frog, but you are always the experimenter and never the subject of the experiment. In the market experiments conducted in this class, you and your classmates will be the participants in the markets as well as the scientific observers who try to understand the results.

It is hard to imagine that a chemist can put herself in the place of a hydrogen molecule. A  biologist who studies animal behavior is not likely to know what it feels like to be a duck. You are more fortunate. You are studying the behavior and interactions of people in economically interesting situations. And as one of these interacting economic agents, you will be able to experience the problems faced by such an agent first hand. We suspect that you will learn nearly as much about economic principles from your experience as a participant as you will from your analysis as an observer.

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