Economics 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 analysis
- Participatory experiments that connect behavioral theory and laboratory research
- Largely self-contained chapters that can each be covered in a single class
- Guidance for instructors on setting up classroom experiments, with either hand-run procedures or free online software
- End-of-chapter problems, including some conceptual-design questions, with hints or partial solutions provided
Charles A. Holt is the A. Willis Robertson Professor of Political Economy and director of the Veconlab at the University of Virginia. A founding coeditor of the journal Experimental Economics and former president of the Economic Science Association, he is also a coauthor of the graduate textbook Experimental Economics (Princeton).
- Preface
- 1 Introduction
- 2 Price Discovery and Exclusion
- I INDIVIDUAL DECISIONS: RISK AVERSION, PROSPECT THEORY, AND LEARNING
- 3 Risk and Decision Making
- 4 Prospect Theory and Anomalies
- 5 Bayes’ Rule
- 6 Belief Elicitation and Ambiguity Aversion
- 7 Individual and Social Learning
- II BEHAVIORAL GAME THEORY
- 8 Some Simple Games: Competition, Coordination, and Guessing
- 9 Multi-Stage Games, Noisy Behavior
- 10 Randomized Strategies
- 11 Choice of Partners, Social Dilemmas
- 12 Contests and Rent Seeking
- 13 Methodology, Nonparametric Tests
- III SOCIAL PREFERENCES
- 14 Bargaining
- 15 Trust, Reciprocity, and Principal-Agent Games
- 16 Voluntary Contributions
- 17 The Volunteer’s Dilemma
- 18 Externalities, Congestion, and Common-Pool Resources
- 19 Voting and Politics Experiments
- IV MARKET EXPERIMENTS
- 20 Monopoly, Cournot, and Cross-Market Price Competition
- 21 Market Power, Collusion, and Price Competition
- 22 Supply Chains
- 23 Adverse Selection in Lemons and Insurance Markets
- 24 Asset Markets and Price Bubbles
- 25 Bank Runs and Macro Experiments
- V AUCTIONS AND MECHANISM DESIGN
- 26 Private Value Auctions
- 27 The Winner’s Curse
- 28 Multi-Unit Auctions: Emissions, Water, License Plates, Securities
- 29 Combinatorial and Two-Sided Auctions
- 30 Matching Mechanisms
- Appendix 1: Hints for End-of-Chapter Problems
- References
- Appendix 2: Instructions for Class Experiments
- Index
“Charlie Holt has been at the very forefront in bringing experiments into the mainstream of economic research and, especially, in using experiments to teach economics. This book will give undergraduates or masters students a chance to learn from a pioneering experimenter and a master teacher.”—Alvin Roth, Stanford University
“This is a great book for teaching undergraduates, covering a host of topics from which teachers can choose, and including experiments to do in class. Charles Holt, one of the pioneers of experimental economics, is a clear thinker and a great expositor. There are no competitors to this book.”—Guillaume R. Fréchette, New York University
“Charles Holt is one of the founders of experimental economics and he has contributed to nearly every one of its subfields. This is an excellent book and there are no viable competing texts for undergraduate experimental economics.”—Charles Noussair, University of Arizona
