Banking on experiments?
Abstract
Purpose
How can laboratory experiments help us understand banking crises, including the usefulness of various policy responses? After giving a concise introduction to the field of experimental economics more generally, the author attempts to provide answers. The paper aims to discuss this issue.
Design/methodology/approach
The author discusses methodology and surveys relevant work.
Findings
History is often too complicated to be meaningfully revamped or modified in the lab, for purposes of insight-by-analogy. But as people argue about how to understand financial history, they bring ideas to the table. It is possible and useful to test the empirical relevance of these ideas in lab experiments.
Originality/value
The paper pioneers broad discussion of how lab experiments may shed light on banking crises.
Keywords
Acknowledgements
JEL Classification — C92, G21
This paper grew out of a lecture the author prepared for an internal seminar on banking organized by the Norwegian Ministry of Finance, as input to a report they prepared on financial markets (Oslo, September 24, 2012; Financial Markets Report, 2012). Previous versions have been posted as working papers at the University of Arizona (Department of Economics WP 13-08) and at Bocconi University (IGIER WP 534). I have benefited from very helpful comments by a referee as well as from Martin Brown, Price Fishback, Rod Garratt, Francesco Guala, Michael Kirchler, Hubert Kiss, Johanna Möllerström, Asaf Plan, Stefanie Ramirez, David Rietzke, Alec Smith, Morten Søberg, Stefan Trautmann, Tiemen Woutersen, and the seminars participants in Oslo as well as at the Universities of Arizona and Gothenburg.
Citation
Dufwenberg, M. (2015), "Banking on experiments?", Journal of Economic Studies, Vol. 42 No. 6, pp. 943-971. https://doi.org/10.1108/JES-08-2015-0145
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited