These experimental study designs are set designs with some rules. The participants make some decisions on how to make deals in the economy. A card to each seller and buyer is given, and they make decisions. We can provide some given information to them that they cannot change. The demand and the supply might upper bounded, this way no buyer or seller can give or ask price higher than the set price mentioned by the fixed demand and the fixed supply curves.
Why experimental studies are required in economics? The experimental studies are done with a limited number of people; however, we can observe the tendencies that each agent exhibits. Their behaviors under the certain conditions teach us important information. Analyzing a group’s behaviors gives us very deep information about the economic behavior of the individuals and the society. The society is the social group that the individuals feel they are belonged to it. Thus, every individual in the society carries the information of the society. Observing bids, offers, and transactions give us essential information to understand the market behaviors.
The studies on the experimental market competition settings show us that the Walrasian hypothesis is falsified. The paper by Smith (1962) suggests us a new hypothesis: “Minimize the total rent of the buyers and the sellers to reach the market equilibrium”. The experimental studies can give us the opportunity to test the scientific hypothesis.
REFERENCE
S, Vernon L. "An Experimental Study of Competitive Market Behavior." Journal of Political
Economy 70 (1962): 111-137.
