Handbook of Environmental and Resource Economics
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Handbook of Environmental and Resource Economics

Edited by Jeroen C.J.M. van den Bergh

This major reference book comprises specially commissioned surveys in environmental and resource economics written by an international team of experts. Authoritative yet accessible, each entry provides a state-of-the-art summary of key areas that will be invaluable to researchers, practitioners and advanced students.
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Chapter 76: Experiments in Environmental Economics

J.F. Shogren and T.M. Hurley


Jason F. Shogren and Terrance M. Hurley 1. Introduction Light a fire, stare at the flames, sift through the ashes, repeat - this is the nature of laboratory experimentation in environmental economics. By choosing what phenomena to explore, institution to evaluate, theory to test, response to measure, a researcher constructs the environment and rules of the game that affect the actual behaviour of economic agents (Smith, 1982, 1991). The researcher’s apriori expectation of rational economic behaviour is either met or not, triggering a new set of experiments to further understand what assumptions drive rationality and what design features send unintended but influential signals. The lab provides the repetition and control needed to understand the behavioural underpinnings of environmental economic phenomena. See Davis and Holt (1993), Friedman and Sunder (1994), and Kagel and Roth (1995) for extensive surveys covering the major areas in experimental economics. Environmental and experimental economics evolved during the 1960s and 1970s; both fields on a separate track but both fields led by pragmatic researchers who judged a method by results, not by preconceived methodological principles. As succinctly argued by Plott (1987, p. 194), ‘[m]ethodological principles should evolve from our experience about what works and what does not work’. The merger of lab experiments into environmental economics began in earnest during the 1980s and continues today. Economists who now turn to the lab to study environmental economic phenomena can look to econometricians from decades past where limited computer capacity, time and money constrained the number of regressions...

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