With National Science Foundation support, Drs. Jason Shachat and Vincent Crawford will establish an experimental economics laboratory at the University of California, San Diego. At the core of the system 16 Pentium 233 MHZ workstations with 128 MB RAM will be linked and placed in a single room, configured to ensure sufficient physical isolation of each subject. The laboratory will achieve two objectives: 1. provide the necessary facilities for faculty and students to conduct research in experimental economics; 2. allow the incorporation of experimental economics techniques into undergraduate and graduate classroom instruction. In recent years, economists have adopted experimental approaches to gain insight into human decision making behavior. Subjects participate in carefully designed decision making exercises and receive monetary or other rewards in proportion to the quality of the resulting outcomes. The experiments tend to focus on studying the performance of real world trading institutions and the effects of different incentive schemes on individual behavior. One major line of research to be pursued involves institutional performance in exchange economies with multiple equilibria, globally instable equilibrium and severe wealth effects and this is a current focus of Dr. Shachat's work. Dr. Crawford will conduct a series of experiments designed to examine the relationship between cognition and behavior in strategic environments. This research will address questions about strategic behavior and the extent to which it reflects players' analyses of their environment as a game, taking the structure and other players' incentives into account. The University of California at San Diego currently lacks an experimental economics laboratory and the new facility will be widely used. In addition to research, it will serve as a teaching device for both undergraduate and graduate classes. Laboratory exercises which directly involve students in economic experiments provide practical demonstrations of economic principles and stimulate interest in the subject. Thus the infrastructural impact of the laboratory will be significant.
