Economic Classroom Experiments: The Handbook for Economics Lecturers

source: The Handbook for Economics Lecturers  from Economics Network

這是一個對經濟學「教學」和「學習」都很棒的網站: 目錄如下, 也有 PDF 版

裡面詳述實驗經濟的教學討論, 找時間要將它整理成中文…

By Dieter Balkenborg  and Todd Kaplan, University of Exeter (UK).

Coordination and Lock-In: Competition with Switching Costs and Network Effects

Joseph Farrell and Paul Klemperer (2007) “Coordination and Lock-In: Competition with Switching Costs and Network Effects," Chapter 31 in Handbook of Industrial Organization, Volume 3, 2007, Pages 1967–2072.

source:; see also for PDF

original Abstract:

Switching costs and network effects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in efficiency, and gives vendors lucrative ex post market power – over the same buyer in the case of switching costs (or brand loyalty), or over others with network effects. Firms compete ex ante for this ex post power, using penetration pricing, introductory offers, and price wars. Such “competition for the market” or “life-cycle competition” can adequately replace ordinary compatible competition, and can even be fiercer than compatible competition by weakening differentiation. More often, however, incompatible competition not only involves direct efficiency losses but also softens competition and magnifies incumbency advantages. With network effects, established firms have little incentive to offer better deals when buyers’ and complementors’ expectations hinge on non-efficiency factors (especially history such as past market shares), and although competition between incompatible networks is initially unstable and sensitive to competitive offers and random events, it later “tips” to monopoly, after which entry is hard, often even too hard given incompatibility. And while switching costs can encourage small-scale entry, they discourage sellers from raiding one another’s existing customers, and so also discourage more aggressive entry. Because of these competitive effects, even inefficient incompatible competition is often more profitable than compatible competition, especially for dominant firms with installed-base or expectational advantages. Thus firms probably seek incompatibility too often. We therefore favor thoughtfully pro-compatibility public policy.


* Switching costs;
* Network effects;
* Lock-in;
* Network externalities;
* Co-ordination;
* Indirect network effects

JEL classification

* L130;
* L150;
* L120;
* L140;
* D430;
* D420

Standardization, Compatibility, and Innovation

Joseph Farrell and Garth Saloner “Standardization, Compatibility, and Innovation," The RAND Journal of Economics,Vol. 16, No. 1 (Spring, 1985), pp. 70-83. 提供的 [PDF]

Notes by Yi-Nung

這篇是最早有關 network externalities 的論文之一

excess inertia :

new technology is not adopted but is efficient

excess momentum (called insufficient friction by Katz and Shapiro, 1992):

new technology is adopted but is inefficient




Katz and Shapiro (1985) present an oligopoly model to show that there is a tendency to too little standardization. However, this is because failure to  standardize has no social benefits without specifying explicit cost to standardization in their model (Farrell and Saloner, 1986b, EL).


original Abstract:

There are often benefits to consumers and to firms from standardization of a product. We examine whether these standardization benefits can “trap" an industry in an obsolete or inferior standard when there is a better alternative available. With complete information and identical preferences among firms the answer is no; but when information is incomplete this “excess inertia" can occur. We also discuss the extent to which the problem can be overcome by communication.

Cited by

Nicholas Economides (1996) “The economics of networks,"International Journal of Industrial Organization, Volume 14, Issue 6, October 1996, Pages 673–699.

Farrell and Saloner (1985) discuss a two-period model where consumers have varying willingness to pay for the change of the technology, measured by theta. Users can switch in period 1 or 2, and switching is irreversible. Users fall in four categories according to the strategy they pick: (i) they never switch, whatever the behavior of others in the first period; (ii) they switch in period 2 if other users have switched in period 1 — jumping on the bandwagon; (iii) they switch in period 1; (iv) switch in period 2 even if others have not switched in period 1. The last strategy is dominated by strategy (iii). Consumers of low theta use strategy (i), consumers of intermediate theta use strategy (ii), and consumers of high theta use strategy (iii). Consumers would like to coordinate themselves and switch in the first period (thereby getting the bandwagon rolling) but are unable to do so, thus creating excess inertia.34 This inertia can be reduced 34 See Katz and Shapiro (1992) for a different view arguing for excess momentum (which they call insufficient friction).

Network effects in technology acceptance: Laboratory experimental evidence

Andrea Pontiggia, Francesco Virili (2010) “Network effects in technology acceptance: Laboratory experimental evidence." International Journal of Information Management, Volume 30, Issue 1, February 2010, Pages 68–77.; 提供的 [PDF]


This research analyzes network effects in technology acceptance. The hypothesis is that the size of the user network affects technology acceptance. Even today, empirical measurement of network effects is challenging and there is a lack of experimental evidence. In order to investigate and measure the relationship between network size (number of adopters) and user acceptance, technology acceptance research needs to broaden its scope and approaches. To overcome this limitation we reproduce a particular type of technology acceptance process in a laboratory experiment, controlling for user network size and testing its influence on user perceptions and, ultimately, on acceptance decisions. We measured user perceptions and analyzed the data using consolidated and tested technology acceptance models. The results confirm our hypothesis, showing a significant effect of user network size on user perceptions. Finally, we discuss the theoretical and managerial implications of our approach and findings.


  • Technology acceptance;
  • Network effects;
  • Network externalities;
  • Laboratory experiment

The economics of intellectual property at universities: an overview of the special issue

Albert N. Link, John T. Scott, Donald S. Siegel (2003) “The economics of intellectual property at universities: an overview of the special issue." international Journal of Industrial Organization, 21 (2003) 1217–1225. [PDF]

1. Introduction

In recent years, there has been a substantial rise in the rate of commercialization of university-based technologies—through patenting, licensing, research joint ventures, and the formation of startup companies. We have also witnessed an increase in investment in science parks and other property-based institutions that facilitate the transfer of technology from universities to firms. Although some have questioned cause and effect (e.g., Mowery et al., 2001), most commentators attribute a substantial portion of this activity to the Bayh–Dole Act of 1980, which dramatically changed the incentives of U.S. universities to commercialize their intellectual property. Bayh–Dole instituted a uniform patent policy across federal agencies, removed many restrictions on licensing, and most importantly, allowed universities, rather than the federal government, to own patents arising from federal research grants.

The Economics of Patents and Copyright

Leveque, Francois and Ménière, Yann, The Economics of Patents and Copyright. MONOGRAPH, Berkeley Electronic Press, July 2004. Available at SSRN:; [PDF]

This ebook is a primer on the economics of intellectual property, meant to be accessible to non-economists. While intellectual property is more than ever at the heart of so-called knowledge economies, it aims to show the contribution that economic analysis can make to the current debates on the increasing role of patents and copyright. It pinpoints the imperfections of the IP system both in the EU and in the US, and discusses possible remedies. The book provides the reader with a general framework of analysis highlighting the economic functions of intellectual property rights. Using this framework, it revisits successively the evolution and specificities of patent law and of copyright law. A final Chapter is devoted to the the interface between intellectual property law and antitrust law. The book contains abundant examples and gives a large place to the findings of empirical economic research. The book is widely used as a textbook in IP law courses.

Number of Pages in PDF File: 61

Keywords: Patent, Copyright, Innovation, Antitrust

JEL Classifications: O3

The design of patent pools: the determinants of licensing rules

Lerner, J., Strojwas, M. and Tirole, J. (2007), The design of patent pools: the determinants of licensing rules. The RAND Journal of Economics, 38: 610–625. [doi] [PDF]


Patent pools are an important but little-studied economic institution. In this article, we first make a set of predictions about the licensing terms associated with patent pools. The theoretical framework predicts that (i) pools consisting of complementary patents are more likely to allow members to engage in independent licensing and (ii) the requirement that firms license patents to the pool (grantbacks) should be associated with pools that consist of complements and allow independent licensing. We then examine the terms of 63 pools, and show that licensing rules are consistent with these hypotheses.

Financial markets in the laboratory: an experimental analysis of some stylized facts

Andrea Morone(2008) “Financial markets in the laboratory: an experimental analysis of some stylized facts," Quantitative Finance, Volume 8, Issue 5, pages 513-532. [working paper PDF]; Source: DOI

實驗說明: An example of the Power Point presentation can be found at

Summary by Yinung

此篇是以實驗建構 single-unit double-auction 財務市場,進行交易,再檢驗成交價的 times-series 性質, 包含:

1. Normality (JB-test)
2. Kurtosis
3. ADF tests
4. Hill estimator (for testing tail distribution)
5. Volatility clustering
6. autocorrelation (returns, squared returns, absolute returns, Box-Ljung)


1. 只用一般的 double-auction 交易市場之設定 + 資訊品質 (猜中機率) 高/低 + 獲得資訊成本高/低,似乎沒有明確找到財務交易 return 的 AR丶GARCH 等常見之資料型態 (stylized facts),也沒有分析為何導致此現象之分析說明

2. 因為在 10 periods 中, 每一個 period 都是獨立, 不解如何能以 time-series 的方式來進行相關檢定?






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Pagan (1996) provided an authoritative survey of these stylized facts and of the econometric techniques how to
treat them.

Various experimental studies attempted to analyse the role of information within financial markets….  can categorize these studies into three groups:

  • Studies addressing the issue of dissemination of information from a group of identical informed agents (insiders) to a group of identical un-informed agents.
  • Studies addressing the issue of aggregation of different pieces of information owned by different traders and its dissemination.
  • Studies addressing the issue of information’s production.

Plott and Sunder (1982) studied the dissemination of information by running an experiment

Plott and Sunder (1988) designed an experiment on information aggregation

Cobweb model

The extremely important aspect of expectation formation and learning in dynamic experimental markets with expectations feedback was partially addressed by Smith, Suchanek and Williams (1988). Recently, Hommes et al (1999, 2000) and Sonnemans et al (1999) tested for expectation formation in a cobweb model (for a survey see also Hommes, 2001).

herd behaviour

The experiment is based on at least two important strands of literature.

  • The first of these strands is that of herd behaviour in a non-market context. The key references are Banerjee (1992) and Bikhchandani, Hirshleifer and Welch (1992), both of which showed that herd behaviour may result from private information not publicly shared.
  • The second strand of literature motivating this paper is that of information aggregation in market contexts. A very early reference is the classic paper by Grossman and Stiglitz (1966) which showed that uninformed traders in a market context can become informed through the price in such a way that private information is aggregated correctly and efficiently.

A summary of the progress of this strand of literature can be found in the paper by Plott (2000).

Original abstract

This paper provides experimental evidence explaining a number of stylized facts associated with the behaviour of financial returns, in particular the fat tailed nature of their distribution and the persistence in their volatility. By means of a laboratory experiment, we investigate the effect of the quantity and quality of information present in a financial market upon its stylized facts, showing how both the quality and quantity of information might have an impact on volatility clustering and the emergence of fat tail returns.