Experimental Economics

AAA

DEFINITION of 'Experimental Economics'

A branch of economics that focuses on individual behavior in a controlled laboratory setting or out in the field. Experimental economics helps to prove or disprove economic theories and create predictions and insights about real-world behavior.

INVESTOPEDIA EXPLAINS 'Experimental Economics'

2002 Nobel laureate Vernon Smith was a pioneer in the field of experimental economics. His early experiments focused on theoretical equilibrium prices and how they compared to real-world equilibrium prices. Smith also conducted experiments to test theoretical assumptions about different types of auctions, allocating airport time slots and organizing energy markets. Smith's economics experiments were groundbreaking in part because it had previously been assumed that economic research could only be based on real-world observations and data. His work set the standard for good economics experimentation.



RELATED TERMS
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects ...
  2. Daniel Kahneman

    A professor emeritus of psychology and public affairs at Princeton ...
  3. Classical Economics

    Classical economics refers to work done by a group of economists ...
  4. Green Economics

    A methodology of economics that supports the harmonious interaction ...
  5. Voodoo Economics

    A slanderous term used by George H. W. Bush in reference to President ...
  6. Welfare Economics

    A branch of economics that focuses on the optimal allocation ...
RELATED FAQS
  1. Why would a company have a subsidiary in a different sector from its main source ...

    A company would have a subsidiary in a different sector from its main source of business if it is looking to increase its ... Read Full Answer >>
  2. Did the repeal of the Glass-Steagall Act contribute to the 2008 financial crisis?

    The repeal of the Glass-Steagall Act was a minor contributor to the financial crisis, if it contributed to the crisis at ... Read Full Answer >>
  3. What is the difference between cyclical and non-cyclical stocks?

    The difference between a cyclical stock and a non-cyclical stock is that a cyclical stock is highly correlated with movements ... Read Full Answer >>
  4. What are the benefits of investing in a cyclical stock?

    Cyclical stocks tend to be highly correlated with the overall business cycle, so an investor can invest in a cyclical stock ... Read Full Answer >>
  5. How can you calculate the difference between nominal value and real value of stock ...

    The nominal value, or book value, of a share is usually assigned when the stock is issued. Market value reflects what the ... Read Full Answer >>
  6. Under what circumstances is the nominal value out of line with the real value of ...

    The nominal value of stock shares is the actual face value when the shares are issued. This represents how much the stock ... Read Full Answer >>
Related Articles
  1. Economics

    The Austrian School Of Economics

    Investopedia explains: If you think economists are only concerned with numbers, check out the Austrian School, who are more like economic philosophers.
  2. Economics

    Understanding Supply-Side Economics

    Does the amount of goods and services produced set the pace for economic growth? Here are the arguments.
  3. Options & Futures

    Nobel Winners Are Economic Prizes

    Before you try to profit from their theories, you should learn about the creators themselves.
  4. Investing Basics

    Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  5. Economics

    The Uncertainty Of Economics: Exploring The Dismal Science

    Learning about the study of economics can help you understand why you face contradictions in the market.
  6. Economics

    The History Of Economic Thought

    Economics is a vital part of every day life. Discover the major players who shaped its development.
  7. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  8. Economics

    Explaining Marginal Propensity to Consume

    The marginal propensity to consume is a measure of how much consumption changes when income changes.
  9. Economics

    Explaining the Value Chain

    A model of how businesses receive raw materials as input, add value to the raw materials, and sell finished products to customers.
  10. Fundamental Analysis

    Explaining Variance

    Variance is a measurement of the spread between numbers in a data set.

You May Also Like

Hot Definitions
  1. Coupon

    The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually. This is also referred to ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  4. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  5. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
Trading Center