Experimental economics is the application of experimental methods 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.
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.
Variants of the subject outside such formal confines include natural and quasi-natural experiments.
Read more about Experimental Economics: Experimental Topics
Famous quotes containing the words experimental and/or economics:
“The very hope of experimental philosophy, its expectation of constructing the sciences into a true philosophy of nature, is based on induction, or, if you please, the a priori presumption, that physical causation is universal; that the constitution of nature is written in its actual manifestations, and needs only to be deciphered by experimental and inductive research; that it is not a latent invisible writing, to be brought out by the magic of mental anticipation or metaphysical mediation.”
—Chauncey Wright (1830–1875)
“There is no such thing as a free lunch.”
—Anonymous.
An axiom from economics popular in the 1960s, the words have no known source, though have been dated to the 1840s, when they were used in saloons where snacks were offered to customers. Ascribed to an Italian immigrant outside Grand Central Station, New York, in Alistair Cooke’s America (epilogue, 1973)