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 15: The role of experiments for policy design

Peter Werner and Arno Riedl

Abstract

In this chapter, we review selected evidence to demonstrate the value of experiments for policy design with a focus on environmental policy and tax policy. Experiments can substantially improve ex-ante predictions about the outcomes of policy interventions, for example, by serving as “testbeds” to compare alternative market rules and mechanisms under tightly controlled conditions. Experiments also yield important insights into systematic deviations from strict rationality and into the heterogeneity of preferences among decision-makers that can form the basis for the (re-) design of policies. Besides describing various experimental approaches applied in the areas of environmental policy and tax policy, we also discuss further directions for successful collaborations between experimental economists and political decision-makers.

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