ABSTRACT
The formal study of information systems in resource allocation theory (Leonid Hurwicz, 1960) and the laboratory experi mental study of resource allocation under alternative forms of market organization (Sidney Siegel and Lawrence Fouraker, 1960, Fouraker and Siegel, 1963; my 1962, 1964 articles) had coincident beginnings and, in important respects, have undergone similar, if mostly independent, intellectual develop ments. The similarity of intellectual develop ment in these two new endeavors is repre sented by the increasing focus upon the role of institutions in defining the information
and incentive structure within which eco nomic outcomes are determined. While the (new)2 welfare economics (Stanley Reiter 1977) was articulating a formal structure for the design and evaluation of allocation mechanisms (institutions) as economic vari ables (Hurwicz, 1973), experimentalists were comparing the performance of experimental economies in which the rules of information transfer and of contract appeared as treat ment variables (Plott and myself, 1978; my 1964, 1976a articles). Since it is not possible to design a laboratory resource allocation experiment without designing an institution in all its detail, it was foreordained by the nature of the questions asked, that the work of experimentalists would parallel that of the (new)2 welfare economics.1
