The Handbook of Experimental Economics, John H. Kagel and Alvin E. Roth, editors, Princeton University Press, 1995. (ISBN 0-691-04290-X, $55.00 (39.50 pounds sterling)

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Edited by John H. Kagel and Alvin E. Roth
is published by Princeton University Press and copyrighted, (c) 1995, by Princeton University Press. All rights reserved. This text may be used and shared in accordance with the fair-use provisions of US copyright law, and it may be archived and redistributed in electronic form, provided that this entire notice is carried and provided that Princeton University Press is notified and no fee is charged for access. Archiving, redistribution, or republication of this text on other terms, in any medium, requires the consent of Princeton University Press.

Contents of this page
1. Introduction to Experimental Economics by Alvin E. Roth
2. Public Goods: A Survey of Experimental Research by John O. Ledyard
3. Coordination Problems by Jack Ochs
4. Bargaining Experiments by Alvin E. Roth
5. Industrial Organization: A Survey of Laboratory Research by Charles A. Holt
6. Experimental Asset Markets: A Survey by Shyam Sunder
7. Auctions: A Survey of Experimental Research by John H. Kagel
8. Individual Decision Making by Colin Camerer

Early reviews (from the bookjacket...) by Ken Binmore, Robert Gibbons, Daniel Kahneman, Richard Thaler, and Ariel Rubinstein.

The impetus for a Handbook of Experimental Economics came from the great growth of interest in the results and methods of laboratory experiments in economics. This created a growing feeling, both inside and outside the experimental community, that it would be useful to have an overview of the field, to help lower the barriers to entry facing potential experimenters, as well as those facing economists and others who wish to have a critical understanding of what experiments accomplish in economics. The charge to the authors of each chapter was therefore both to provide a survey for specialists that could help set an agenda for future research, and to provide the non-specialist with a critical review of work completed to date, with the aim of elucidating the role of experimental studies as a progressive research tool. For this reason, authors were asked where possible to concentrate on series of experiments, not merely single experiments in isolation, in order to demonstrate the way that experiments build on one another to more clearly delineate observed phenomena and to narrow their possible causes 1.

This Handbook is the work not only of many years, but also of many hands, by no means all of whom are authors of the chapters. In order to invite the maximum amount of feedback to the author of each chapter, a three day conference was convened in Pittsburgh in June of 1990, at which each author presented an extended outline of his proposed chapter. Investigators from every major center of experimental economics at the time were invited to attend, and most of these centers were in fact represented 2. The discussions were lively, sometimes even heated. Each author subsequently circulated the various versions of his chapter widely to both experimenters and others interested in the particular topic area, and received many comments and suggestions. Indeed, the pace of experimentation was sufficiently rapid during the time that the chapters were being written that revisions were often required to take account of recent developments, sometimes developments that had been initiated by the earlier discussions.

The capstone of this effort came in January of 1994 when the (virtually) final chapters were presented at the annual meeting of the American Economic Association, in Boston.

This Handbook has eight chapters. Every one except the first of these surveys an area of economics in which there has been a concentration of experiments. The first chapter, in contrast, is meant to serve as an introduction to experimental economics as a whole. In our editorial discussions with the chapter authors, they were told that they were free to write each chapter under the assumption that readers would have read the Introduction. Thus each author was free to focus each chapter as sharply as seemed appropriate.

One suggestion that we received more than once during the course of this project was that the Handbook should include a chapter on methodology, which would tell people how to do experiments. We have not done this. Our view is that a better way to learn how to design and conduct experiments is to consider how good experiments grow organically out of the issues they are designed to investigate, and the hypotheses among which they are designed to distinguish. For this reason, we asked each author to address methodological issues that were important for the experiments being discussed 3.

One of the pleasures of participating in this project has been that it has afforded us the best seats from which to observe one of the most exciting games in town. New centers of experimental economics have sprung up continually while this work was underway, and the interaction between theorists and experimenters has increased apace. Indeed, one of the special pleasures of finally finishing this project is that it is clear that in only a few more years, a single volume will no longer be able to do even the rough justice that we manage here, to such a rapidly growing area of economic research.

March 1994
Pittsburgh, PA.

Endnotes to the preface

1.This volume thus has a very different, although complementary purpose to the earlier volume Laboratory experimentation in economics: Six points of view (Alvin E. Roth, editor, Cambridge University Press, 1987). In that volume, six investigators with different approaches to experimentation (John Kagel, Charles Plott, Alvin Roth, Reinhard Selten, Vernon Smith, and Richard Thaler) were each asked to describe work that illustrated their own approach. In this Handbook, in contrast, the authors were asked to describe how series of experiments are mediated by and mediate the different approaches of different investigators.

2.Although we failed to preserve a complete list of attendees, some of whom only attended for a day, the following list is nearly complete: John O'Brien (Carnegie-Mellon University), Colin Camerer (University of Pennsylvania, now at California Institute of Technology), Robin Dawes (Carnegie-Mellon University), Robert Forsythe (University of Iowa), Glenn Harrison (University of South Carolina), John Hey (University of York), Elizabeth Hoffman (University of Arizona, now at Iowa State University), Charles Holt (University of Virginia), John Kennan (University of Iowa, now at Wisconsin), John Ledyard (California Institute of Technology), Dan Levin (University of Houston), Graham Loomes (University of York), Jack Ochs (University of Pittsburgh), Vesna Prasnikar (University of Pittsburgh, now at University of Ljubljana and Northwestern University), Tatsuyoski Saijo (University of Tsukuba), Andrew Schotter (New York University), Leo Simon (UC Berkeley), Vernon Smith (University of Arizona), Sanjay Srivastava (Carnegie-Mellon University), Shyam Sunder (Carnegie-Mellon University), Richard Thaler (Cornell University, now at Chicago), John Van Huyck (Texas A&M University), and James Walker (University of Indiana). Regrettably no one from the active German (then West German) group of experimenters was able to accept our invitation.

3.Readers with a methodological inclination might keep an eye out for the following kinds of issues: the role of monetary incentives on behavior, demand induced effects, subject pool effects, inducing risk preferences (the binary lottery technique), techniques for inducing infinite horizon games, effects of subject experience, within versus between group designs, and abstract versus concrete problem representation (to name some of the issues that appear in more then one chapter).

Chapter 1--[pages 3-109]
Introduction to Experimental Economics
by Alvin E. Roth



Chapter 4--[pages 253-348]
Bargaining Experiments
by Alvin E. Roth


  • I. Agreements
  • II. Disagreements and Delays
  • III. Concluding Remarks


  • Bibliography of bargaining experiments.

    Chapter 5--[pages 349-443]
    Industrial Organization: A Survey of Laboratory Research
    by Charles A. Holt


  • I. Overview
  • II. Beginnings
  • III. The Relevance of Experiments to the Study of IO
  • IV. Design and Procedural Issues
  • V. Trading Institutions
  • VI. Monopoly Regulation and Potential Entry
  • VII. Market Structure and Market Power
  • VIII. Plus Factors That Facilitate Collusion
  • IX. Product Differentiation and Multiple Markets
  • X. Conclusion


    Chapter 6--[pages 445-500]
    Experimental Asset Markets: A Survey
    by Shyam Sunder


  • I. Informational Efficiency of Markets
  • II. Futures and State-Contingent Claims
  • III. Bubbles and False Equilibria
  • IV. Learning and Dynamics
  • V. Econometric Comparisons of Field and Laboratory Data
  • VI. Investment and Public Policy
  • VII. Laboratory Modeling of Asset Markets
  • VIII.Concluding Remarks


    Chapter 7--[pages 501-585]
    Auctions: A Survey of Experimental Research
    by John H. Kagel


  • I. The Symmetric Independent Private-Values Model
  • II. Common Value Auctions
  • III. Additional Topics
  • IV. Conclusions


    Detailed table of contents of chapter 8:

    Chapter 8--[pages 587-703]
    Individual Decision Making
    by Colin Camerer

  • I. Introduction
  • II. Judgment
  • III. Choice under Risk and Uncertainty
  • IV. Conclusions and Research Directions


    Short reviews

    --from the hardcover bookjacket:

    "I wish every economist and economics graduate student would read this book. Those who are considering running experiments should be forced to; this is a bible in how to run good experiments. Every chapter is amazingly comprehensive and has been written by a true expert in the field. But economists who would never dream about running an experiment can benefit from reading this just as much. The beauty of experiments is that they force theorists to think carefully about their theories."
    Richard Thaler, Cornell University

    "This Handbook surveys one of the most important developments in economics in the last decade, the flowering of experimental economics. Led by two of the leaders of current economic theory and experimental economics, an impressive group of researchers provides the reader with an excellent up-to-date overview of one of the most fascinating and promising areas of current economic research."
    Ariel Rubinstein, Tel Aviv University and Princeton University

    "The Handbook is not only a contribution to experimental economics, it is a major contribution to social science. It successfully combines the rigor and clarity of economic analysis with a commitment to open-minded examination of data, and a refreshing willingness to question dogma. Every student of human choice and action will find this text useful."
    Daniel Kahneman, The Woodrow Wilson School of Public and International Affairs, Princeton University

    "Experimental economics comes of age with this volume. At last the dust begins to clear, and it becomes possible to confront theory with coherent and reliable laboratory data."
    Ken Binmore, University College, London

    "This Handbook heralds the emergence of experimental economics as a field within economics. Several chapters emphasize that strong connections are developing to such fields as industrial organization and macroeconomics. Just as important, however, the Handbook may open a dialogue with the legions of researchers in other disciplines, including organizational behavior, political science, psychology, and sociology, who also conduct experiments to improve their understanding of human behavior."
    Robert Gibbons, Johnson Graduate School of Management, Cornell University

    --and from the paperback book jacket:

    "This book is impressive for the clarity, depth, and informativeness of its surveys. The focus on series of experiments is very instructive... One can learn a lot from the issues debated, the methodological digressions, and the many suggestions for further research... This is a great book that is whole-heartedly recommended."
    F. van Winden, The Journal of Economics

    "The book provides not only a comprehensive and deep review of major areas of experimental research, but it is also exceptionally intellectually stimulating and insightful for theoretical economists as well as those who are interested in more immediate policy issues."
    Katerina Sherstyuk, Economic Record