The experimental approach in economics is a driving force behind some of the most exciting developments in the field. The 'experimental revolution' was based on a series of bold philosophical premises which have remained until now mostly unexplored. This book provides the first comprehensive analysis and critical discussion of the methodology of experimental economics, written by a philosopher of science with expertise in the field. It outlines the fundamental principles of experimental inference in order to investigate their power, scope and limitations. The author demonstrates that experimental economists have a lot to gain by discussing openly the philosophical principles that guide their work, and that philosophers of science have a lot to learn from their ingenious techniques devised by experimenters in order to tackle difficult scientific problems.

The paper is motivated by sustained interest in the capabilities approach to welfare economics combined with the paucity of economic statistics that measure capabilities at the individual level. Specifically, it takes a much discussed account of the normatively desirable capabilities constitutive of a good life, argued to be comprehensive at a high level of abstraction, and uses it to operationalize the capabilities approach by developing a survey instrument which is then used to elicit information about capabilities at the individual level. The paper explores the extent to which these capabilities are covariates of life satisfaction measure (utility) and investigates aspects of robustness and sub-group differences using standard socio-demographic variables as well as a relatively novel control for personality. In substantial terms, we find that there is some evidence of quantitative, but no qualitative, gender and age differences in the capabilities-life satisfaction relationship. Furthermore, we find that indicators from a wide range of life domains are linked to life satisfaction, a finding that supports the multi-dimensional approaches to poverty and quality of life and the view that people do not just value income (opulence in Sen's language) per se. Our most important contribution, however, is primarily methodological and derives from the demonstration that within the conventions of household and social surveys, human capabilities can be measured with the aid of suitably designed statistical indicators.JEL Codes: D60, C80

Strong Reciprocity theorists claim that cooperation in social dilemma games can be sustained by costly punishment mechanisms that eliminate incentives to free ride, even in one-shot and finitely repeated games. There is little doubt that costly punishment raises cooperation in laboratory conditions. Its efficacy in the field however is controversial. I distinguish two interpretations of experimental results, and show that the wide interpretation endorsed by Strong Reciprocity theorists is unsupported by ethnographic evidence on decentralised punishment and by historical evidence on common pool institutions. The institutions that spontaneously evolve to solve dilemmas of cooperation typically exploit low-cost mechanisms, turning finite games into indefinitely repeated ones and eliminating the cost of sanctioning.JEL Classification: D02, D03, C92, H41, Z1

We explore by purely experimental means a heterogeneous agents scenario in experimental public goods games, assuming the existence of at least three types of player: free riders, cooperators, and reciprocators. We identify the various types by means of four classification methods, and then play the public goods game with homogeneous groups. We observe that (eq1) the average contribution level is enhanced in this setting; (2) the decay phenomenon is replicated in groups of ‘pure’ free riders, whereas in groups of cooperative and reciprocating players the contribution is high and fairly stable throughout the game. Copyright Springer Science + Business Media, Inc. 2005economic experiment, voluntary contribution, heterogeneous agents, reciprocation,

Strong Reciprocity theorists claim that cooperation in social dilemma games can be sustained by costly punishment mechanisms that eliminate incentives to free ride, even in one-shot and finitely repeated games. There is little doubt that costly punishment raises cooperation in laboratory conditions. Its efficacy in the field however is controversial. I distinguish two interpretations of experimental results, and show that the wide interpretation endorsed by Strong Reciprocity theorists is unsupported by ethnographic evidence on decentralised punishment and by historical evidence on common pool institutions. The institutions that spontaneously evolve to solve dilemmas of cooperation typically exploit low-cost mechanisms, turning finite games into indefinitely repeated ones and eliminating the cost of sanctioning.JEL Classification: D02, D03, C92, H41, Z1