Experimental Economics

Flashcards that define key terms and concepts from the lecture on experimental economics.

Social Dilemmas

Situations where self-interested individuals may contribute to good or bad outcomes.

Invisible Hand

A metaphor suggesting that individuals' self-interested actions can lead to positive social outcomes.

Tragedy of the Commons

A situation in which individuals acting in their own self-interest deplete shared resources.

Prisoner's Dilemma

A scenario where individuals must choose between cooperation and defection, leading to a non-optimal outcome for both.

Public Goods

Goods that are non-excludable and non-rivalrous; everyone can benefit from them.

Free Riding

Benefit from a public good without contributing to its provision.

Nash Equilibrium

A situation where no player can benefit by changing their strategy while other players keep theirs unchanged.

Ultimatum Game

A game where one player proposes a division of a sum, and the second player can accept or reject it.

Elinor Ostrom

Political scientist known for her work on economic governance and the commons.

Repetition in Games

A mechanism where playing a game multiple times influences players to cooperate.

Peer Punishment

A strategy that allows individuals to penalize low contributors in a public goods game.

Shock Therapy

Rapid economic liberalization policies designed to transition economies.

Assurance Games

Games with two pure-strategy Nash equilibria, promoting cooperation or defection.

Coordination Game

A game where players benefit from coordinating their strategies.

Social Preferences

Individuals' motivations based not solely on self-interest, but also on others' welfare.

Tit-for-Tat Strategy

A strategy where a player replicates the opponent's last move, used in repeated games.