Experimental economics involves the application of laboratory methods as a means of understanding human behavior. By conducting laboratory experiments, economists are able to evaluate competing theories of individual and market behavior where naturally occurring data is absent or limited. Arguably the first use of a market experiment occurred in a graduate economics class involving a teacher (who was a well-known economist in the area of industrial organization) and a student (who would later be a pioneer in the field of experimental economics). Can you name the teacher, student, the college, and the approximate year wherein the first recorded use of a classroom experiment in economics took place?
Congratulations to Lang Zhao for correctly identifying that Edward Chamberlin of Harvard University conducted the first recorded market experiment in 1948. A participant in that experiment was Vernon Smith, who later went on to win a Nobel Prize in Economics for helping to pioneer a new branch of economic analysis known as experimental economics.