One econometric rule of thumb is that greater dispersion in observations of the independent variable improves estimates of regression coefficients and therefore produces better results, i.e., lower standard errors of the estimates. Nevertheless, students often seem to mistrust precisely the observations that contribute the most to this greater…

Describes a class experiment where students search a hypothetical job market for jobs paying wages in a known range but with an unknown wage distribution. The experiment is divided into three "trials", each one introducing different variables (unemployment insurance, search costs, and recession). Includes experiment instructions and a…