policymakers demonstrate

Developments in Data for Economic Research 593
Auctions. In experimental auctions, one typically observes the winner’s curse
in common value auctions, and overbidding in auctions where bidders’ values
are privately known and unaffiliated.
Social preferences. Participants do not simply care about their own earnings.
Fairness, reciprocity motives and social image motivations also have an impact
on their behaviour (see e.g., Fehr et al., 1998).
Public goods. In games of voluntary provision of public good, participants
typically start with a contribution level of 50 per cent of their endowment. This
is followed by a decrease of the contributions to 10 per cent. If participants
have the opportunity to punish each other at a personal cost, contributions start
and stay at high levels because low contributions are sometimes punished, with
important cultural variations (Herrmann et al., 2008).
Monopoly. In experimental markets with a monopolist, the actual price
demanded by the monopolist is below the monopoly price because buyers withhold
demand, which disciplines the monopolist to lower prices.
In all these cases the experiments were typically replicated 10–100 times,
either as pure replications or with an initial replication followed by changes
to the original design to test the robustness of the findings. A typical example
is provided by the public good experiments, with and without punishment
opportunities (see Herrmann et al., 2008).
On the other hand, some experimental findings are not as robust, due to
endogenous expectations, local norms, or other reasons. An example of this
is provided by experimental financial markets. Some, but not all, of these
markets experience price bubbles and, when bubbles occur, their size differs
substantially.
Lab experiments are also used in teaching economics. More and more introductory
classes in economics use experiments to bring theoretical concepts like
the impact of incentives, or market equilibration, or social dilemmas, to life.
This increasing use of simple economic experiments arises from the fact that
the results are reliable. The dependability of economic experiments is similar
to other experimental demonstrations, such as visual illusions that are used to
teach principles of perception in cognitive psychology, and chemical reactions
used in basic chemistry. On the other hand, experimental economics still has
limited influence on the core courses in economics graduate training. Even at
institutions such as Caltech, where most economics faculty do some experiments,
PhD students can graduate without knowing anything at all about the
methods or findings.
New Developments and Outlook for Lab Experiments
A new development in lab experiments is the use of biomedical tools. This
started with the use of eye-tracking tools and the measurement of response