Every experimentalist will sooner or later come across a situation in which results from initial baseline treatments conform nicely to the Nash equilibrium, but subsequent changes in parameters push the data in ways not predicted by Nash. This may happen when one begins by giving theory its best...

Despite the discovery of predatory intent in several widely cited antitrust cases, many industrial organization economists have argued that predatory pricing is irrational and rarely observed. The argument is that pricing below cost in order to drive competitors out of the market will be...

The use of monetary incentives may not affect behavior much in some contexts, or it may simply reduce the dispersion of data around some theoretical prediction. But the experiments indicate that incentive effects may be large and systematic in other contexts. In the absence of a widely accepted...

Public goods experiments are notable in that they produce an array of systematic treatment effects that are inconsistent with the predictions of standard game theory. In response, theorists have proposed alternative models designed to explain these interesting (and often intuitive) patterns in...

The standard public goods experiment involves linear payoffs in which the unique Nash equilibrium is at the lower boundary, i.e., full free riding. Contributions in these experiments tend to decline toward the Nash equilibrium in most treatments, but contributions persist even after as many as...

This chapter focuses on the information cascade experiments. The concept of an information cascade can be explained in the context of a specific numerical example that was used in initial laboratory experiments. The predictions are publicly announced as they are made, but individuals are not...

Even when markets seem to alternate between collusive and non-collusive phases, the price differences are difficult to interpret since a breakdown in collusion may be caused by a demand decrease that would have reduced prices in any case. This makes the laboratory an ideal setting to study...

Many aspects of antitrust policy are influenced by the possibility that sellers in concentrated markets may have the power to raise prices above competitive levels. Of course, anyone can raise prices, so the issue is whether a change in structure, e.g., a merger, will allow one or more sellers...

The quantal response equilibrium (QRE) is an extension of the standard model of Nash equilibrium which allows for errors in choice. The QRE can be viewed as a generalization of statistical models of discrete choice behavior of individuals to a game theoretic setting. Just like in discrete choice...