Three Essays on Experimental Economics

Abstract

Experimental economics has been developed in relatively recent years. Thanks to its power to bridge economic theory and observation, the experimental method has become increasingly widespread in the last two decades. As we know, economic theories are devised to explain economic activities and have traditionally been evaluated with statistical data from existing "atural" markets. Although econometricians can deal with the effects of interrelated variables of interest, natural data often fail to have "critical tests" of theoretical propositions and sometimes do not satisfy assumptions in the economic model. Controlled experimental conditions overcome these obstacles by building systematic evaluations of economic theories. Specifically, experimental methods can provide the most direct tests of behavioral assumptions. For example, game-theory predictions are often based on subtle behavioral assumptions, which are almost impossible to test in the naturally occurring markets, but an intentionally designed experiment can test a specific assumption directly.

This thesis consists of three self-contained chapters on experimental economics. All three chapters are motivated by the observation of individual decisions in daily life environments through experimental methods. Besides using the experimental techniques, this thesis also applied the game theory, econometric methods, and statistical tools to analyze the experimental data and derive implications with economic insights.