The goals of
experimental finance are to establish different market settings and environments to observe experimentally and analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanism and returns processes. This can happen for instance by conducting trading simulations or establishing and studying the behaviour of people in artificial competitive
marketIn economics, a financial market is a mechanism that allows people to easily buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis.Financial markets have evolved significantly over...
-like settings.
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The goals of
experimental finance are to establish different market settings and environments to observe experimentally and analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanism and returns processes. This can happen for instance by conducting trading simulations or establishing and studying the behaviour of people in artificial competitive
marketIn economics, a financial market is a mechanism that allows people to easily buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis.Financial markets have evolved significantly over...
-like settings.
Researchers in experimental finance can study to what extent existing
financial economicsFinancial economics is the branch of economics concerned with "the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment" ....
theory makes valid predictions and attempt to discover new principles on which theory can be extended.
The methodology of experimental finance is closely related to that of
Experimental economicsExperimental economics is the application of experimental methods to study economic questions. Experiments are used to test the validity of economic theories and test-bed new market mechanisms. Using cash-motivated subjects, economic experiments create real-world incentives to help us better...
.