Charles A. Holt

In this expansive book, Charles Holt evaluates early findings in the evolution of experimental economics and explores pathways for future discoveries. The book presents a sequence of experiments that fit together, punctuated with descriptions of the people involved and their motivations. Chapters present a historical perspective on primary areas of experimental economics, illustrated with critical data-based figures. Topics covered include market experiments, asset market bubbles, prospect theory, risk preferences, belief elicitation, behavioral biases, behavioral and stochastic game theory, and trust and incentives. The book also provides practical insights into auction design based on the author's extensive experience developing instruments including emissions and irrigation permits, combinatorial broadcast licenses and a diverse set of securities. This book is highly recommended for scholars and students interested in the implications and the history of controlled economic experiments. Those in the field of experimental economics, and related social sciences such as political science will benefit from this book’s insights.

An innovative introduction to economic behavior that uses interactive experiments to promote experience-based discoveryThis book presents a unique active-learning approach to economic thinking, providing a behavioral perspective on basic economic concepts ranging from trust to trade. Each chapter features a classroom experiment where students engage directly with the material as market participants, and chapters come with warm-up exercises, quizzes, and incisive summaries. The Economic Experience empowers students to develop insights into essential economic principles and goes beyond merely documenting behavioral anomalies by showing students how to navigate and anticipate them through hands-on learning and team building.Encourages discovery of key behavioral insights with interactive class simulationsProvides a Socratic structure through lab reports for interpreting and applying lessons from experiment results while interacting with fellow studentsIncludes “What Economists Do” sections that highlight key applications and policy issuesCovers standard topics such as gains from trade, marginal analysis, and the resilience of competitive marketsEnables students to experience the negative effects of market imperfections related to monopoly power, non-price rent seeking, corruption, congestion, and inadequate incentives for the provision of public goodsIntroduces notions of risk and strategic behavior in games and auctionsExplains foundational macroeconomic concepts such as financial markets and the role of money while addressing behavioral issues like bank runs and asset market price bubbles that may arise in a macroeconomic settingIs supported by a free website that instructors can use to set up classroom experiments online

An innovative introduction to economic behavior that uses interactive experiments to promote experience-based discoveryThis book presents a unique active-learning approach to economic thinking, providing a behavioral perspective on basic economic concepts ranging from trust to trade. Each chapter features a classroom experiment where students engage directly with the material as market participants, and chapters come with warm-up exercises, quizzes, and incisive summaries. The Economic Experience empowers students to develop insights into essential economic principles and goes beyond merely documenting behavioral anomalies by showing students how to navigate and anticipate them through hands-on learning and team building.Encourages discovery of key behavioral insights with interactive class simulationsProvides a Socratic structure through lab reports for interpreting and applying lessons from experiment results while interacting with fellow studentsIncludes “What Economists Do” sections that highlight key applications and policy issuesCovers standard topics such as gains from trade, marginal analysis, and the resilience of competitive marketsEnables students to experience the negative effects of market imperfections related to monopoly power, non-price rent seeking, corruption, congestion, and inadequate incentives for the provision of public goodsIntroduces notions of risk and strategic behavior in games and auctionsExplains foundational macroeconomic concepts such as financial markets and the role of money while addressing behavioral issues like bank runs and asset market price bubbles that may arise in a macroeconomic settingIs supported by a free website that instructors can use to set up classroom experiments online

From a pioneer in experimental economics, an expanded and updated edition of a textbook that brings economic experiments into the classroomEconomics is rapidly becoming a more experimental science, and the best way to convey insights from this research is to engage students in classroom simulations that motivate subsequent discussions and reading. In this expanded and updated second edition of Markets, Games, and Strategic Behavior, Charles Holt, one of the leaders in experimental economics, provides an unparalleled introduction to the study of economic behavior, organized around risky decisions, games of strategy, and economic markets that can be simulated in class. Each chapter is based on a key experiment, presented with accessible examples and just enough theory.Featuring innovative applications from the lab and the field, the book introduces new research on a wide range of topics. Core chapters provide an introduction to the experimental analysis of markets and strategic decisions made in the shadow of risk or conflict. Instructors can then pick and choose among topics focused on bargaining, game theory, social preferences, industrial organization, public choice and voting, asset market bubbles, and auctions.Based on decades of teaching experience, this is the perfect book for any undergraduate course in experimental economics or behavioral game theory.New material on topics such as matching, belief elicitation, repeated games, prospect theory, probabilistic choice, macro experiments, and statistical analysisParticipatory experiments that connect behavioral theory and laboratory researchLargely self-contained chapters that can each be covered in a single classGuidance for instructors on setting up classroom experiments, with either hand-run procedures or free online softwareEnd-of-chapter problems, including some conceptual-design questions, with hints or partial solutions provided

Quantal Response Equilibrium presents a stochastic theory of games that unites probabilistic choice models developed in psychology and statistics with the Nash equilibrium approach of classical game theory. Nash equilibrium assumes precise and perfect decision making in games, but human behavior is inherently stochastic and people realize that the behavior of others is not perfectly predictable. In contrast, QRE models choice behavior as probabilistic and extends classical game theory into a more realistic and useful framework with broad applications for economics, political science, management, and other social sciences. Quantal Response Equilibrium spans the range from basic theoretical foundations to examples of how the principles yield useful predictions and insights in strategic settings, including voting, bargaining, auctions, public goods provision, and more. The approach provides a natural framework for estimating the effects of behavioral factors like altruism, reciprocity, risk aversion, judgment fallacies, and impatience. New theoretical results push the frontiers of models that include heterogeneity, learning, and well-specified behavioral modifications of rational choice and rational expectations. The empirical relevance of the theory is enhanced by discussion of data from controlled laboratory experiments, along with a detailed users' guide for estimation techniques. Quantal Response Equilibrium makes pioneering game-theoretic methods and interdisciplinary applications available to a wide audience.

A small but increasing number of economists have begun to use laboratory experiments to evaluate economic propositions under carefully controlled conditions. Experimental Economics is the first comprehensive treatment of this rapidly growing area of research. While the book acknowledges that laboratory experiments are no panacea, it argues cogently for their effectiveness in selected situations. Covering methodological and procedural issues as well as theory, Experimental Economics is not only a textbook but also a useful introduction to laboratory methods for professional economists. Although the authors present some new material, their emphasis is on organizing and evaluating existing results. The book can be used as an anchoring device for a course at either the graduate or advanced undergraduate level. Applications include financial market experiments, oligopoly price competition, auctions, bargaining, provision of public goods, experimental games, and decision making under uncertainty. The book also contains instructions for a variety of laboratory experiments.