Economic theories that have changed us: experimental economics

Experimental economics is not really a new theory but a (still) relatively new method of studying the kind of questions that economists have studied for ages. But the addition of the experimental method to the economist’s toolbox is remarkable for at least two reasons. First, even very recently some reasonably well-known economists have questioned the possibility that economics is to a considerable extent an experimental science, notwithstanding the fact that noted experimental economics proponents include Reinhard Selten (who shared the 1994 Nobel Prize with John Nash and John Harsanyi); (Vernon L. Smith, awarded the 2002 prize together with Daniel Kahneman; Elinor Ostrom; and Alvin E. Roth). The experimental method has established itself firmly as a key tool in economists’ toolbox. ….[READ]