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. Economics

    A social science that studies how individuals, governments, firms ...
  4. Classical Economics

    Classical economics refers to work done by a group of economists ...
  5. Voodoo Economics

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

    A methodology of economics that supports the harmonious interaction ...
Related Articles
  1. The Austrian School Of Economics
    Economics

    The Austrian School Of Economics

  2. Understanding Supply-Side Economics
    Economics

    Understanding Supply-Side Economics

  3. Nobel Winners Are Economic Prizes
    Options & Futures

    Nobel Winners Are Economic Prizes

  4. Economic Indicators That Do-It-Yourself ...
    Investing Basics

    Economic Indicators That Do-It-Yourself ...

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

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

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center