Why labour market experiments?

Over the last decades, there has been a steady increase in the use of experimental methods in economics. We discuss the advantages of experiments for labour economics in this paper. Control is the most important asset behind running experiments; no other empirical method allows a similarly tight control as do experiments. Moreover, experiments produce replicable evidence and permit the implementation of truly exogenous ceteris paribus changes. We also discuss frequent objections to experiments, such as a potential subject pool bias, the stake levels used in experiments, the number of observations as well as internal and external validity. We argue that although these objections are important, careful experimentation can circumvent them. While we think that lab and field experiments offer a very valuable tool, they should not be viewed as substitutes but as complements to more traditional methods of empirical economic analysis. (C) 2003 Elsevier Science B.V All rights reserved.