Software

With the generous support from IFREE, ESI develops software and distributes it for free for teachers interested in using economic experiments in their classrooms. Please contact Bart Wilson for a password to download the software.

This program contains three streamlined experiments discussed in the working paper "Discovering Economics in the Classroom with Experimental Economics and the Scottish Enlightenment" by Taylor Jaworski, Vernon Smith, and Bart Wilson.   This paper describes a curriculum for teaching economics which draws connections to the Scottish Enlightenment through the use of economic experiments. The key features of the curriculum are the low technology requirements, complete instructions for running the experiment and debriefing the results, and a guide for teacher-led roundtable discussions motivated by the Scottish philosophers. The main goals are to present economic principles to young students in a way that is both exciting and accessible, while emphasizing the discovery process underlying the wealth of nations since the Industrial Revolution (Smith 1776).  The first program illustrates the gains from specialization and exchange in a production and consumption experiment (Crockett, Smith, and Wilson 2009). Second, as Smith (1982) discusses, the classic oral double auction demonstrates how a price mechanism spontaneously orders the buying and selling decisions of individuals with dispersed and private knowledge of their personal circumstances (for the first published double auction experiment, see Smith 1962). Finally, the extensive form game experiment illustrates the prevalence and success of trust and reciprocity in modern contexts that are otherwise apparently dominated by impersonal self-interested exchange in markets (McCabe, Rigdon, and Smith 2003).

• Crockett, Sean, Vernon L. Smith, and Bart J. Wilson. 2009. “Exchange and Specialisation as a Discovery Process.” Economic Journal, 119(539): 1161-1188.
• McCabe, Kevin A., Mary L. Rigdon, and Vernon L. Smith. 2003. “Positive Reciprocity and Intentions in Trust Games.” Journal of Economic Behavior and Organization, 52(2): 267-275.
• Smith, Adam. 1776 [1981]. The Wealth of Nations. Liberty Fund: Indianapolis, IN.
• Smith, Vernon L. 1962. “Experimental Study of Competitive Market Behavior.” Journal of Political Economy, 70(2): 111-137.
• Smith, Vernon L. 1982. “Markets as Economizers of Information: Experimental Examination of the ‘Hayek Hypothesis’.” Economic Inquiry, 20(2): 165-179.

HandRun Version 1

The first program conducts a double auction to complement the lessons on supply and demand, and the second involves various voluntary contributions mechanisms to support lessons on public goods. These programs require a computer running Windows XP attached to an LCD projector.

The figure below displays a screen shot for debriefing the results of a double auction experiment using high school students. The left panel is the screen that is displayed to the students during the experiment. Each red caret indicates an ask to sell and each blue caret a bid to buy. Where they meet is a contract between a buyer and a seller. The first contract is displayed on the left most portion of the figure and is also reported at the top of the table on the right. During the debriefing with the students, the professor then clicks on the checkmark boxes at the bottom of the screen to overlay the supply and demand of the market, stressing the importance of the private and dispersed knowledge of these values and costs, and yet through the course of the trading, these students in the first period of trading exchange the competitive quantity at prices near the competitive prediction. The professor can also click on a checkmark box to shade in green the proportion of the total gains from trade that the students realized, which in this example is 100% in period 1.

Available in Spanish and English*

LAN Teaching Suite

These programs require a computer for each student running Windows XP connected via a local area network and one computer for the monitor:

• normal form games for game theory lessons on prisoners' dilemma, coordination games, battle of the sexes,
• extensive form games for game theory lessons on sequential decisions and backward induction in trust and centipede games, including sorting mechanisms of McCabe, Rigdon, and Smith (2006),
• single and double blind ultimatum games for lessons on bargaining, with options for both buyer-seller and proposer-responder contexts with and without contest entitlements in Hoffman et al. (1994),
• networked version of voluntary contributions mechanisms for providing public goods, including Kurzban et al. (2001) real-time mechanisms,
• double auction asset markets for lessons on public information versus endogenous expectations in markets,
• one-sided auctions for further lessons on the role of institutions in supply and demand with options for English outcry (with hard or soft endings), English clock, Dutch clock, and first- and second-price sealed-bid auctions,
• electric power markets for further applications on supply and demand implementing Wheatstone bridge networks and active versus passive buyers in Rassenti et al. (2003), and
• combinatorial clock auction for advanced discussions on auctions for spectra.

Program Your Own Experiment

The programming example provides the source code for the ultimatum game. It is written in Visual Basic 6. Visual Basic 6 is recommend over Visual Basic.net 2003 because of its easy use. Visual Basic.net 2005 looks to be a good replacement but is not yet in wide spread use. The example assumes you are familiar with Visual Basic 6 or have some basic programming knowledge. If you do not it is recommend that you get a book on the subject. Amazon typically has a large selection books on VB6.

Price Gouging

The Price Gouging experiment is for teachers interested in demonstrating the effects of price gouging between a group of buyers and sellers. It has a separate set of installation instructions included in the zip file.