Software

With the generous support from IFREE, ESI develops software and distributes it free of charge to 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 paper “Discovering Economics in the Classroom with Experimental Economics and the Scottish Enlightenment” by Taylor Jaworski, Vernon

Smith and Bart Wilson, which is published in the International Review of Economics Education. This paper describes a curriculum for teaching economics that 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 round-table 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.

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)
• Combinatorial clock-auction for advanced discussions on auctions for spectra
• A general equilibrium production and consumption experiment by Crockett, Smith and Wilson (2009) that illustrates the gains from specialization and exchange
• A three-village general equilibrium production and consumption experiment with traveling intermediaries, as reported in Kimbrough, Smith and Wilson (2008)
• A gasoline market experiment by Deck and Wilson (2008), which examines the price effects of banning or not banning zone pricing in a vertically separated market with differentiated products

Program Your Own Experiment

The programming example provides the source code for the Ultimatum Game. It is written in Visual Basic 6. The example assumes you are familiar with Visual Basic 6 or have some basic programming knowledge. If you don’t, it’s recommended that you get a book on the subject. Amazon typically has a large selection of books on VB6.