Experiments and Economic Development : Lessons from field labs in the developing world

Along with the traditional primitives of economic development (material preferences, technology, and endowments), there is a growing interest in exploring how psychological and sociological factors (e.g., bounded rationality, norms, or social preferences) also influence economic decisions, the evolution of institutions, and outcomes. Simultaneously, a vast literature has arisen arguing that economic experiments are important tools in identifying and quantifying the role of institutions, social norms and preferences on behavior and outcomes. Reflecting on our experience conducting experiments in the field over more than five years, we survey the growing literature at the intersection of these two research areas. Our review has four components. In the introduction we set the stage identifying a set of behavioral factors that seem to be central for understanding growth and economic development. We then divide the existing literature in two piles: standard experiments conducted in developing countries, and experiments that have been conducted to answer specific questions about economic development. We then offer methodological advice concerning the design of experiments conducted in the field and on how to econometrically identify sociological factors in experimental data. We conclude by suggesting topics for future research.