Theories of Industrial Organization as Explanations of Experimental Market Behavior

The current professional interest in experimental economics seems to stem in part from a recently acquired ability of economists to explore subtle implications of institutional details for market performance. Advances in understanding the role of information in market models suggest the possibility that the contribution of institutions in affecting information patterns and resource allocation can be identified and assessed. Game theory has increasingly focused upon the structure of strategy spaces as dictated by special institutional structures. The discovery of the theoretical existence of decentralized incentive compatible processes for the provision of public goods allows one to speculate about the possibility of many different types of institutions which might solve the public goods and free rider problems. The continued growth and development of the field of law and economics has directed the theory toward the study of the relationship between legal technology and economic principles. Theoretical works on the nature of institutions and possible manifestations of their influence fill the journals.