Experimental Economics

At the beginning of the semester one of the assistants told that we could earn some money by attending to some experiments. I registered to the website not only to earn some money but also I was very curious about how can they make experiments in economics. Finally I could attend to one of the experiments at CenterLab before I turn back. It was a decision making practice for the prices of a certain commodity thinking that you are one of the only two firms in the market. In the real life you earn some money depending on the profit you make at the end of 40 rounds. Everyone is given a list of profits that will be made (a) if we are the only one to choose it and if it is the lowest price (b) if both firms chose the same price (c) if you are not the one to choose the lowest price (means zero profit). It is a different type of prisoner’s dilemma, meaning that you have to consider the possible decision of the other party in order not to lose a lot. The important point was to offer the lowest price with the highest profit if both of the firms chose it; so that you can be sure that the other firm will also chose it since it benefits the most too. Then there is an equilibrium attained until one of the firms makes the first change. However, it is possible that people do not make the best decision and give a lower price although it is less profitable for them in order to leave you with zero profit. It was very enjoyable for me to live the theories that I was thought until now, just in one hour. Maybe you do not earn a lot but I recommend you to try it once at least…