Efficiency in Markets: Evidence from Classroom Experiments with a Cross-Section of Students from East and Central European Cou

Three experiments were run in Prague, Czech Republic to demonstrate to students the robustness of market institutions. Students participated in Vernon Smith’s “double-auction” experiment, the “double-auction” with price controls, and Holt and Laury’s (1997) voluntary provision of public goods experiment. Despite a large number of diverse students (121 students from 26 different countries), the expected and efficient outcomes were still realized. This is an especially powerful result given the fact that most of these participants were from post-Soviet countries where the institutions of private property and the rule of law are largely absent. This paper reports these results and highlights thoughts from participants in the experiments. The paper also provides econometric evidence. This section examines how individuals with higher levels of education performed in the experiment (undergraduate or graduate student), whether one’s college major (Economics, Political Science, International Relations, Philosophy, or History) mattered, whether one’s gender mattered, and whether being an American student mattered. * Scott Beaulier is a Mercatus Center Social Change Graduate Fellow, and a PhD student in Economics at George Mason University. Peter J. Boettke is Professor of Economics at George Mason University, Deputy Director of the James M. Buchanan Center for Political Economy, Senior Research Fellow at the Mercatus Center, and Faculty Director of the Mercatus Center’s Global Prosperity Initiative. Anne Rathbone is a PhD student in Economics at George Mason University. The ideas presented in this research are the authors' and do not represent official positions of the Mercatus Center at George Mason University. W OR KI NG P AP ER Efficiency in Markets: Evidence from Classroom Experiments with a Cross-Section of Students from East and Central European Countries, and the Former Soviet Union* Scott A. Beaulier George Mason University sbeauli1@gmu.edu Anne Rathbone George Mason University arathbone@aol.com Peter J. Boettke George Mason University pboettke@gmu.edu Abstract: Three experiments were run in Prague, Czech Republic to demonstrate the robustness of market institutions. Students participated in Vernon Smith’s “doubleauction” experiment, the “double-auction” with price controls, and Holt and Laury’s (1997) voluntary provision of public goods experiment. Despite a large number of diverse students (121 students from 26 different countries), the expected and efficient outcomes were still realized. This is an impressive result since most participants were from post-Soviet countries where the institutions of private property and the rule of law are largely absent. This paper reports the results from these experiments. The paper also provides econometric evidence. We examine how individuals with higher levels of education performed in the experiment (undergraduate or graduate student), whether one’s college major (Economics, Political Science, International Relations, Philosophy, or History) mattered, whether one’s gender mattered, and whether being an American student mattered. Three experiments were run in Prague, Czech Republic to demonstrate the robustness of market institutions. Students participated in Vernon Smith’s “doubleauction” experiment, the “double-auction” with price controls, and Holt and Laury’s (1997) voluntary provision of public goods experiment. Despite a large number of diverse students (121 students from 26 different countries), the expected and efficient outcomes were still realized. This is an impressive result since most participants were from post-Soviet countries where the institutions of private property and the rule of law are largely absent. This paper reports the results from these experiments. The paper also provides econometric evidence. We examine how individuals with higher levels of education performed in the experiment (undergraduate or graduate student), whether one’s college major (Economics, Political Science, International Relations, Philosophy, or History) mattered, whether one’s gender mattered, and whether being an American student mattered. * The authors thank Matt Bradley and Matt Dobra for helpful comments and suggestions. We also thank students participating in the 2002 American Institute for Political and Economic Systems (AIPES) conference for participating in the experiments highlighted in this paper. We gratefully acknowledge the Mercatus Center and Fund for American Studies for financial assistance. A special thanks goes out to Charles Brockner for helping us track down some of the data used in this study. The standard disclaimer applies. W OR KI NG P AP ER