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Experiments

The goal of experimental economic research using interactive, economic decision experiments is a better understanding of human decision behavior. The predictions of economic theories are often tested in experiments and further developed. Other experiments test existing or planned institutions in the "wind tunnel". Laboratory experiments are also used for the training of students and practitioners.

The Cologne Laboratory for Economic Research deals with a large number of economic issues. Research topics include Internet-specific questions of the optimal design of auction platforms, electronic negotiations and reputation mechanisms; the design of energy markets and other markets in infrastructure industries; the development of rules and procedures for political processes, elections and e.g. the allocation of research funds, the improvement of forecasts through experimental markets, etc. Ultimately, the research goal is to develop modern, practical algorithms for new and improved marketplaces and other economic and social institutions.

In a complementary research focus, the extent to which the limits of cognitive abilities and egoistic motivations are decisive for understanding real economic behavior is investigated. The aim is to better understand and model the mutual effects of social preferences and limited rationality on the one hand and the architecture of economic rules on the other hand.

The "design" of the experiment specifies the underlying "game", its parameters and monetary incentives. Preferences, technologies and other economically relevant parameters can be perfectly induced and controlled. Often only a single parameter is changed between two arrangements to be compared.

The data generated in the experiment are evaluated using economic-theoretical, statistical and econometric methods. Unexpected results are often checked in further arrangements. The results and conclusions are typically published in research papers.