Economics was long considered as a non-experimental science which relied on “real data” in its empirical work, rather than data resulting from laboratory experiments in a controlled environment. This is gradually changing. A by now large and growing number of empirical papers in Economics are based on experimental data.
The basis of experimental economics is to create, in a laboratory setting, an often artificial environment which allows the experimenter to isolate one particular aspect of individual decision-making, while holding as far as possible the other decision criteria constant. The advantage of this approach is that it is often very difficult in “real data” to distinguish individuals’ own preferences from the particular circumstances in which their decisions are made (including the different costs and benefits of the decision, and whether the individual had accurate information about the decision at hand). Experimental economics allows the perfect control of circumstances, including the accurate manipulation of financial incentives. This laboratory approach is complemented by “natural experiments”, which cover subjects who are more representative than the students who are often used in laboratory experiments.

Experimental Economics at the Paris School of Economics

Laboratory
The Paris School of Econmics has its own experimental laboratory: the LEEP (Laboratoire d’Economie Expérimentale de Paris).
>> Visit the LEEP website
Taking part in experiments at the LEEP
No qualifications are needed to take part in experiments. Participation in experiments is voluntary and allows participants to gain sums of money which depend on the decisions that they take, as well as the decisions taken by other participants.
>> Details on how to sign up and additional practical information are available at the following website:
http://leep.univ-paris1.fr/orsee/public/
Contacts
For further information, please contact Nicolas Jacquemet and Jean-Christophe Vergnaud.
Seminar
The seminar “Economy & Psychology” takes place every friday.

Experimental economics is now used in a number of different domains. It has notably been used to test, and challenge, the traditional postulates of microeconomics, such as those which posit that individuals are purely egoistic, perfectly rational and with no self-control problems. Experiments also shed new light on individuals’ decisions faced with strategic interactions, which is the domain of game theory. For example, most auctions used by different governments to sell radio frequencies for mobile telephone networks or television channels, amongst other things, were pre-tested in laboratory settings. In general, mechanism design (which proposes trade procedures, intermediation and so on, in different settings) has greatly benefitted from this new approach. Experimental Economics has also been used, although less often, in the domain of Macroeconomics.
Recognition of the key role played by experimental economics recently came in the form of the 2002 Nobel prize in Economics, jointly awarded to the psychologist Daniel Kahneman and to the experimental economist of market structures Vernon Smith.
Partly based on experimental results (in both economics and psychology) a new research domain, behavioural economics, has become increasingly important over the past 20 years. Experimental economics is now a separate research domain at the Paris School of Economics.