Designing and validating an agent based commodity trading simulation who s dating kola boof
Charles Plott of the California Institute of Technology collaborated with Smith in the 1970s and pioneered experiments in political science, as well as using experiments to inform economic design or engineering to inform policies.
In 2002, Smith was awarded (jointly with Daniel Kahneman) the Bank of Sweden Prize in Economic Sciences "for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms".
Experiments are used to help understand how and why markets and other exchange systems function as they do.
An alternative approach with experimental dimensions is agent-based computational modeling.
Smith found that in some forms of centralized trading, prices and quantities traded in such markets converge on the values that would be predicted by the economic theory of perfect competition, despite the conditions not meeting many of the assumptions of perfect competition (large numbers, perfect information).
Over the years, Smith pioneered – along with other collaborators – the use of controlled laboratory experiments in economics, and established it as a legitimate tool in economics and other related fields.
Coordination games are games with multiple pure strategy Nash equilibria.
There are two general sets of questions that experimental economists typically ask when examining such games: (1) Can laboratory subjects coordinate, or learn to coordinate, on one of multiple equilibria, and if so are there general principles that can help predict which equilibrium is likely to be chosen?
Economic experiments have measured how this deviation varies across cultures.