Laboratory experiments in economics and the applications on international economics

Abstract

The use of laboratory experiments as a method to test economic theory has began in the 1960s. Nowadays, with these applications, there have been significant developments about principles to be followed and procedures to be applied in economic experiments. Thanks to laboratory experiments, economists get the chance to observe how people make decision in an environment like real-world and the opportunity to test the validity of economic theory. However, the laboratory experiments in economics have been generally directed to the testing of theories regarding the different market structures like bargain, equilibrium, price offer. In this respect, laboratory experiments conducted in the field of international economics have been in a relatively small number. The few experiments conducted in this area have been mostly directed to testing of theories with regard to international trade and exchange rate. The aim of this study is to introduce the laboratory method used in economics and to show how it can be applied to international economics studies in the context of pioneering work.