Handbook of Research Methods and Applications in Experimental Economics
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Handbook of Research Methods and Applications in Experimental Economics

Edited by Arthur Schram and Aljaž Ule

This volume offers a comprehensive review of experimental methods in economics. Its 21 chapters cover theoretical and practical issues such as incentives, theory and policy development, data analysis, recruitment, software and laboratory organization. The Handbook includes separate parts on procedures, field experiments and neuroeconomics, and provides the first methodological overview of replication studies and a novel set-valued equilibrium concept. As a whole, the combination of basic methods and current developments will aid both beginners and advanced experimental economists.
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Chapter 14: Experiments in macroeconomics: methods and applications

Camille Cornand and Frank Heinemann


This chapter lays out in what ways laboratory experiments can be useful for macroeconomics and discusses some of the methods used in such experiments. Among the main advantages are: bench-testing of alternative policies, capturing strategic uncertainty and biases from standard preferences or Bayesian updating, and accounting for heterogeneity in agents’ expectations and behavior. It is explained how DSGE models are implemented in laboratory experiments and how heuristic switching models can be used to analyze expectations out of equilibrium. A short literature review provides some results from direct tests of the various elements of microfoundation on which DSGE models are built. The methods of testing consumption smoothing and informational frictions are discussed in more detail. While experimental macroeconomics is a growing field, which has been useful in many respects, this chapter also discusses its challenges and limitations.

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