The Elgar Companion to Public Choice
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The Elgar Companion to Public Choice

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Edited by William F. Shughart II and Laura Razzolini

This authoritative and encyclopaedic reference work provides a thorough account of the public choice approach to economics and politics. The Companion breaks new ground by joining together the most important issues in the field in a single comprehensive volume. It contains state-of-the-art discussions of both old and contemporary problems, including new work by the founding fathers as well as contributions by a new generation of younger scholars.  
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Chapter 24: Public choice as an experimental science

Lisa R. Anderson

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24 Public choice as an experimental science Lisa R. Anderson 1 Introduction This chapter reviews experimental studies in the field of public choice, including tests of foundational theories and potential remedies for problems of collective decision making. Economists conducted experiments as early as the 1930s, but laboratory research has only gained widespread acceptance in the profession in recent decades.1 Experiments have proven to be extremely useful for testing theories in so far as they permit the experimenter to control assumptions about key variables such as incentives and information flows. Since many public choice theories pose interesting questions susceptible to laboratory methods, it is a popular area for experimental research. In addition, the laboratory provides a safe environment for testing and fine tuning policies that cannot easily be tested with naturally occurring data. Section 2 examines laboratory studies of individual decision making with externalities. Positive and negative externalities are considered in the context of public goods provision and the overuse of common pool resources, respectively. In addition, some tests of the Coase theorem are discussed. Section 3 examines rent-seeking behavior in the laboratory and Section 4 reports results from voting experiments. Section 5 concludes. 2 Individual decision making with externalities The assumption that humans are rational, utility-maximizing actors generates clean behavioral predictions. Generally, self-interest and market forces lead to an efficient allocation of resources. However, observed market failures prompt us to reconsider some aspects of human interaction. Many issues that interest social scientists arise because individual decisions are not made...

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