EXPERIMENTAL ECONOMICS Meaning and
Definition
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Experimental economics is a branch of economics that utilizes controlled laboratory or field experiments to study economic behavior and outcomes. It employs scientific methods to examine how individuals, groups, or markets behave in various economic situations, particularly those where existing theories fall short in explaining real-world phenomena. This research approach allows economists to observe and analyze economic decision-making with a greater level of control, reliability, and precision than traditional observational or theoretical studies.
Through the use of controlled experiments, experimental economics aims to investigate cause-and-effect relationships within economic systems. It tests and refines economic theories, hypotheses, and policy proposals by subjecting them to rigorous empirical scrutiny. By manipulating variables, making comparisons, and measuring behavior, it helps economists assess the impacts of different mechanisms, incentives, and policies on individuals' choices, market outcomes, and overall economic welfare.
Experimental economics often involves the recruitment of participants who engage in specially designed market or game-like scenarios, where they make economic decisions while interacting with others. Researchers collect data on individual choices, transactions, and outcomes, and employ statistical analyses to derive meaningful insights. Moreover, experiments can be conducted in various settings, such as laboratories or natural environments, to enhance the external validity and generalizability of findings.
Overall, experimental economics enables economists to uncover novel aspects of economic behavior that conventional economic models may overlook or misrepresent. It provides a valuable, empirical foundation for policy-making, economic theory development, and understanding the intricate dynamics of economic systems.
Etymology of EXPERIMENTAL ECONOMICS
The word "experimental" in "experimental economics" refers to conducting experiments to study economic behavior and test economic theories. The etymology of the word "experimental" comes from the Latin word "experiri", meaning "to try, test, or experience". The suffix "-mental" is derived from the Latin "-mentum" and ultimately from the Proto-Indo-European root "-men-" meaning "mind" or "intent". Therefore, "experimental" describes the intention or purpose of testing or studying something.
The word "economics" has a different etymology. It comes from the Ancient Greek word "oikonomika" or "oikonomia", which means "household management" or "administration of a household". It is derived from "oikos" meaning "house" and "nemein" meaning "to manage" or "to distribute".
