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Experimental economics is the application of experimental methods[1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).[2]
A fundamental aspect of the subject is design of experiments. Experiments may be conducted in the field or in laboratory settings, whether of individual or group behavior.[3]
Variants of the subject outside such formal confines include natural and quasi-natural experiments.[4]
- ^ Including statistical, econometric, and computational. On the latter see Alvin E. Roth, 2002. "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Econometrica, 70(4), pp. 1341–1378 Archived 2004-04-14 at the Wayback Machine.
- ^ See, e.g., Grechenig, K., Nicklisch, A., & Thöni, C. (2010). Punishment despite reasonable doubt—a public goods experiment with sanctions under uncertainty. Journal of Empirical Legal Studies, 7(4), 847–867 (link).
- ^ • Vernon L. Smith, 2008a. "experimental methods in economics," The New Palgrave Dictionary of Economics, 2nd Edition, Abstract.
• _____, 2008b. "experimental economics," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
• Relevant subcategories are found at the Journal of Economic Literature classification codes at JEL: C9. - ^ J. DiNardo, 2008. "natural experiments and quasi-natural experiments," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.