Collaborative Research: Competitive Market Experiments for the Microeconomics Curriculum

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Economics (82) Experimental economics has contributed significantly to our understanding of the successes and limitations of models of competitive markets, and has also demonstrated how interactions among individual sellers and buyers generate market outcomes. An important goal of efforts to improve the undergraduate microeconomics curriculum is to develop student-use models of prices and allocations in a market economy. Students who participate in market experiments directly experience interactions among sellers and buyers. They see how these lead, in many market settings, to efficient allocations and stable market prices. Intellectual MeritOver the past 4 years, internet accessible market experiments that demonstrate key concepts from microeconomic models of competitive markets have been developed. In these experiments, students interact with one another as sellers or buyers in a market. As a group, their decisions and actions determine prices and exchange quantities, and the outcomes that they generate typically correspond closely to the predictions of the competitive equilibrium model. This type of exercise has had a substantially positive impact on students' learning. Implementation of a market model in an experiment makes the model tangible, which facilitates students' understanding of the model's elements and increases their confidence in the relevance and predictive capability of the model. In the current proposal we are working to extend the experiments to include the long-run equilibrium model - one of the key models in the microeconomics curriculum - and then to apply the model to problems in taxation and regulation. With these additions, the experiments available on "Econport" will include all of the core market models taught in the undergraduate microeconomics curriculum. Econport is a resource available through the National STEM Digital Library. Broader ImpactThe market experiments that we have developed have many advantages. Because they are internet based experiments, they are widely accessible and independent of computing platform. Because they are compiled programs, they are fast, reliable, and support a customized user interface. These characteristics have been selected so that colleges and universities that do not have a dedicated economics laboratory - or that have an economics laboratory but do not have market experiment software - will be able to incorporate these experiments into the undergraduate microeconomics curriculum. Our expectation is that this approach to market experiments will broaden access to these experiments to any institution where students have internet access, which now includes most if not all undergraduate programs in the U.S. As future experiments are developed by faculty in the relatively small number of institutions that conduct research on market experiments, they can be made quickly available to undergraduate instructors.