Bienestar Social

PRESENTATION

This paper describes the methodology and main results of the use of experimental economics as a teaching tool.

This is basically placed in the context of object study game theory where it is necessary to take decisions and interact with other participants. Subsequently, we analyze the situation from the theoretical point of view and contrasts the decisions made by the students with theoretical predictions. In this way, students are actively involved in teaching and learning process faster and easier with the theoretical concepts of the experimental economics.

OBJECTIVES

Facilitate the design of new experiments using the innovative methodology of experimental economics.

DEVELOPMENT

To achieve our objectives, we have designed and produced two different experiments, which we describe below. For each experiment, we present the objectives; the written instructions were given to participants along with the rest of the material for making decisions

EXPERIMENT I. BEAUTY CONTEST GAME

• Objective:

A Keynesian beauty contest is a concept developed by John Maynard Keynes and introduced to explain price fluctuations in equity markets.

Learning the basic concept of game theory: the balance of Nash and the process of iterated elimination of strictly strategies dominated.

• Motivation:

Since the Nash equilibrium is an abstract concept difficult to understand by students, this experiment allows them to learn for themselves the reasoning used game theory to reach the solution of a game.

We use a simple instruction set but at the same time, difficult to solve because it requires infinite steps to eliminate strictly dominated strategies. This is the beauty contest game (whose rules described below).

In literature there are a variety of versions used in the experiments on the beauty contest. In our experiment, we performed the version published in Alba-Fernandez et al. (2006), where the game is repeated four times to allow the student to learn the solution gradually.

• Instructions:

Then you will engage in an economic experiment. The instructions are simple and if you follow them carefully you can win a amount of money.

In this experiment you will have to make decisions repeatedly for 4 rounds. In each round, your decision is to choose a number within the interval [0,100], choosing zero or 100. You must write your choice in the leaf decision in this round and deliver it to the teacher. Once the teacher has collected all class elections will determine the winner that round.

The winning number is the number closest to 2/3 of the average of all the numbers chosen by the class. The winner of each round will receive a reward of 5 €.

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