ABSTRACT
Market experiments deserve an entire course; this chapter is mainly an invitation to read more. It presents some classic experiments prior to 1980 and one strand of work in the 1990s. The common thread is the Hayek hypothesis: somehow the market combines dispersed private information held by individual buyers and sellers, and finds a competitive equilibrium price that maximizes social gains. Applied to field data, the hypothesis is a bit mystical because the private information (willingness to buy or to sell) is not observable. Laboratory markets allow us to penetrate the mystery, check the truth of the hypothesis, and start to identify the underlying forces.
