policymakers demonstrate

592 Barcellan, Bøegh Nielsen, Calsamiglia, Camerer, Cantillon et al.
Akerlof’s 1982 theory of involuntary unemployment assumed that workers and
firms are prone to exchange gifts, in which firms pay higher wages and workers
repay the wage gift with high effort. In theory, this mechanism is used by firms
to induce workers to provide reciprocal effort in situations otherwise characterized
by moral hazard. This hypothesis was confirmed by many experiments
(beginning with Fehr et al., 1993), which in turn led researchers to develop
theories to explain reciprocity (e.g., Dufwenberg and Kirchsteiger, 2004) and
to look for similar kinds of reciprocity in the field (see e.g., Falk, 2007). The
interplay between the lab and field data can also go the other way. For example,
the winner’s curse was first observed in field data on oil-lease bidding (Capen
et al., 1971). It was then extensively analysed in lab experiments (summarized
by Kagel and Levin, 2002).
Lessons from Lab Experiments
During the last 30 years, lab experiments have become well-established and
central to economics research. This is reflected by the number of articles reporting
experimental results that are published in economic journals. Between
2006–2010, about 100 experimental papers were published in leading general
journals (American Economic Review, Econometrica, Journal of Political
Economy, Quarterly Journal of Economics, Review of Economic Studies, and
Economic Journal), and more than 350 papers were published in specialized
journals (such as Games and Economic Behavior, Journal of Economic Behavior
and Organization, and Experimental Economics). 15
While there are also some experimental studies in macroeconomics and
political economy, the huge majority of the papers (about 95%) investigate four
broadly defined fields: Individual decisions, social preferences, markets, and
games. This reflects the close relation of lab experiments with (micro)economic
theory. Most of the experimental findings are quite robust up to plausible variations
of the experimental design. These robust findings include:
Markets. In market experiments with induced supply and demand for a
homogenous good, observed prices and quantities converge quickly to the market
clearing equilibrium, in particular when trade is organized in a centralized
manner (‘double auctions’). This result holds for very thin markets (even with
only three traders on each market side), for a huge variety of different demand
and supply conditions, for multiple connected markets operating at the same
time, for different subject pools, etc. (for an overview see part 1 of Plott and
Smith, 2008).
Games. In many experimental games, the observed outcome coincides with the
Nash equilibrium prediction. Systematic deviations from the Nash equilibrium
prediction have induced the development of level-k and quantal response theory,
which can (most of the time) explain the observed deviations from Nash.