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2/ Lucas (1986) praises classic market experiments by V Smith (
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'56) and animal exp's by Kagel and Battalio. At the end Bob introduces a question about monetary economics: What is the equilibrium in an exchange economy where young sell goods to the old for fiat money?
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'56) and animal exp's by Kagel and Battalio. At the end Bob introduces a question about monetary economics: What is the equilibrium in an exchange economy where young sell goods to the old for fiat money?
3/ the price is q_t in period t. Eq (8) specifies a stable price (q_{t+1}=q_t)=15/16). It can be arrived at by a sequence of adaptive expectations. But there are a continuum of equilibrium prices. Lucas wonders how to learn about what will happen and proposes *an experiment*... 
4/ Here is his explanation for why an experiment is appropriate. One of the best and most cogent explanations ever. It should be taught in every experimental econ course (we'll teach it in our 1st yr core next year)
5/5 Finally, Bob offers a specific design. He says that merely designing an experiment forces a theorist to bet on what parts of the theory are 'serious'. (PS no discussion of "external validity" at all-- the lab is just the best way to learn about behavior w/ ideal control.)
1/ RIP Bob Lucas, one of the deepest and clearest thinkers in economics. He also wrote one of the best papers on behavioral+experimental economics for a landmark 1986 "summit meeting" on #behavioraleconomics... jstor.org/stable/2352771 (Jstor, could not find easy-access .pdf)
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