Abstract

The focus of this project is the use of laboratory experiments that are revolutionizing our understanding of economics by validating a behavioral perspective. This perspective is lent to teaching and research with a special emphasis on public decision-making, as well as developing environmental and business applications.

Issue

The Laboratory for Experimental Economics and Decision Research in Applied Economics and Management has the objective of using market experiments that employ a behavioral perspective from psychology to improve economic institutions for more efficient regulation and market design. In addition, the laboratory is used in a wide variety of courses to provide experiential learning in a market environment.

Response

Examples of problems that are currently under study include the design of markets for electric power that can withstand the "perfect storm" that California experienced, the design of incentives to control non-point source pollution from agriculture, the design of institutions to increase voluntary contributions for public goods including generic advertising of healthy foods, field experiments to help understand the relationship between USDA programs and obesity, and basic research on behavioral anomalies and the provision of public goods. In addition, the laboratory is used in many course such as AEM 250, AEM 414, AEM 450, AEM 651, Econ 102, PAM 230 and others at Cornell.

Impact

The research on electric power market design has affected the institutions used in many markets in the United States. In particular it has informed the design of the markets run by the New York System Operator (NYISO) as several investigators using the lab sit on NYISO boards. Similarly, USEPA policy with respect to Superfund, Air Toxics, and non-point pollution has been influenced by research conducted in AEM on these issues using the lab. The lab has also been used extensively in giving electric power industry officials and regulators experience with simulated markets.

Funding Sources

• Other Federal non-USDA (e.g., NSF, NIH, DOA, DOD)
• Other USDA (e.g., Water Quality, Special Grants, NRI)

Collaborators

• Cornell Electrical Engineering
• Cornell Economics
• Cornell Department of Policy and Mangement
• NSF
• USEPA
• USDA
• NIH

Key Personnel

• Applied Economics and Management, Timothy Mount, Gregory Poe, Duane Chapman, David Just, Brian Wansink, Cindy VanEs, Kent Messer
• Economics, Richard Schuler
• Electrical Engineering, Robert Thomas, Ray Zimmerman
• Policy and Management: Sinan Unur, Jenny Gerner, Rosemary Avery