Advanced Microeconomics II: Experimental Economics

Textbook for the course is: Holt & Davis, Experimental Economics -- however, we will be studying a lot of additional materials -- these are linked on the relevant lectures. Alternate Wordpress Website: AZ Students. Book & reference materials available from: IIIE Library

Other courses: Macroeconomics at PIDE: Sep 2018 to Jan 2019

SHORTLINK for THIS WEBSITE: -- THIS course is Advanced Micro II given in Spring 2018 at PIDE. The PREVIOUS course was Advanced Micro I given in Fall 2017

Previous Course: Experimental Economics 2012 (shortlink:

Course Outline

Objectives: Last time I taught Experimental Economics, it was a stand-alone course in experimental economics. Website linked above gives lectures and reference materials. This time, I am teaching the course as Advanced Microeconomics II. This course has an entirely different objective. Now I would like to use Experimental Economics to teach the traditional materials taught in Microeconomics. The Experimental Method makes the material accessible and understandable to students, since they get direct and immediate experience with the concepts covered due to being subjects in an experiment which puts them into the situation which economic theory describes. In addition, it is my hope to supplement the experiments with ABM: Agent Based Modeling -- this will give students experience in running computer based simulations of experiments. This is actually the process of constructing Models. However the ABD models are radically different from traditional Micro Models. Traditional Micro models are drastically over-simplified because they need to be worked out with pen and paper in the minds of the economist. The computer based ABM models feed in data on 100s or 1000s or even millions of agents, and let the computer solve for outcomes -- which may or may not be equilibrium. This is a radically new and different way of creating economic models, which will be the basis and foundation for the microeconomics of the 21st Century. The old style micro has proven to be a complete failure. See my paper on The Empirical Evidence Against Neoclassical Utility Theory: A Survey of the Literature. Learning this new methodology will allow students of this course to lead the way towards the construction of the new micro we need for this new century and millenium.

Lecture 1: The Oral Double Auction (ODA): Supply & Demand Theory experimentally verified.

Lecture 2: Discussion of THEORY of S&D and link with ODA.

Lecture 3: Variants of ODA where S&D equilibrium fails. Information & Learning requirements

Lecture 4: ODA: Explaining Convergence

Lecture 5: Illustrations of Alternative Micro-Structure for ODA; Implications.

Lecture 6: Decisions under Uncertainty: Expected Utility theory

Lecture 7: Methodology: Prospect Theory Versus Psychological Protocols

Lecture 8: Camerer: Prospect Theory in the Wild

Lecture 9: Barberis-Thaler Survey of Behavioral Finance: Part I - The Efficient Markets Hypothesis

Lecture 10: (cont) Part II: Irrational Behavior.

AM2=Advanced Micro II -- AM2L11 = Lecture 11: This is just a continuation of sequence of lectures above.

AM2L11 Bubbles -- an experimental game which shows how bubbles can be created in an artifical game

AM2L12 Posted Prices -- the contrast between Oral Double Auction and Posted Prices.

AM2L13 ET1% & PP

AM2L14 Third Generation IE

AM2L15 Posted Prices in Real World

AM2L16 IO & PP

AM2L17: Bargaining

AM2L18 In-Class Experiment

AM2L19 Auctions

AM2L20 Voluntary Contribution Mechanism (VCM)

AM2L21 Public Goods

AM2L22 Asymmetric Info

AM2L23 Asset Markets

AM2L24 Subjective Probability

=========BELOW is OUTLINE of OLD COURSE--- IGNORE -- it will be deleted later

Lecture 11: Monetary and Non Monetary Rewards== Kube et. al. & Saima Mahmood-Asad Zaman

Lecture 12:Social Norms== Chapter 4 of Ariely: Predictably Irrational

Lecture 13: Reciprocity: Fehr

Lecture 14: Punishment & Rewards: Using Reciprocity to Establish Social Norms

Lecture 15: Bargaining: Section 4. of Camerer

Lecture 16:Fairness: Chapters 10 and 11 of Quasi Rational Economics by Thaler

Lecture 17: Social Norms==Do the Right Thing: But Only if Others Do So by Cristina Bicchieri and Ertex Xiao

Lecture 18: Social Norms: Defining them and assessing their effects==BICCHIERI1 and CHAVEZ2

Lecture19: Indigenous Communities, Cooperation and Communication by Ghate,

Lecture 20: