Experimental Economics for Teaching the Functioning of Electricity Markets

In the field of electricity markets, the development of training tools for engineers has been extremely useful. A novel experimental economics approach based on a computational Web platform of an electricity market is proposed here for the practical teaching of electrical engineering students. The approach is designed to diminish the gap that exists between theory and practice in this field, through a methodological strategy for teaching/learning called "simulation." In the proposed simulation exercise, groups of students operate as market agents and have the freedom to create their own strategies. Additionally, a theoretical model and a specific simulation tool are used for the evaluation of the proposed strategies. The test system is based on the market structure of the Chilean wholesale electricity market and was tested on student groups at two universities. Based on the students' performance, the strategic behavior of agents and their impact on market price evolution are described and analyzed. Student assessment supports the conclusion that the proposed experimental economics framework offers a useful mechanism in student practical work for understanding and explaining the observed phenomena.