Introduction: What Role Can Experiments Play in Research on Regulation?

Abstract

Experimental research follows well-established procedures and design rules. Subjects are recruited to participate in a study, and report at a specified time and place. Typically subjects are undergraduate students, though if experience with a particular market or institution is thought to be an important factor, other kinds of subjects may also be recruited to participate. Subjects are given specific instructions, make decisions that result in differential payoffs, and, importantly, they are paid what they earn in the experiment. While the earliest market experiments (e.g., Smith 1962) were conducted using hand-run procedures and written forms, most contemporary market experiments like those in these issue are sufficiently complex that a computerized environment is necessary. Other types of experiments involving valuation or simple games are frequently run by hand. The typical experimental data set has a panel structure, with a time series of decisions for each of a set of subjects, and is analyzed accordingly.