Experimental finance

The goals of experimental finance are to understand human and market behavior in settings relevant to finance. Experiments are synthetic economic environments created by researchers specifically to answer research questions. This might involve, for example, establishing 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.

Fields to which experimental methods have been applied include corporate finance, asset pricing, financial econometrics, international finance, personal financial decision-making, macro-finance, banking and financial intermediation, capital markets, risk management and insurance, derivatives, quantitative finance, corporate governance and compensation, investments, market mechanisms, SME and microfinance and entrepreneurial finance.[1][2] Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions and attempt to discover new principles on which theory can be extended.

Experimental finance is a branch of experimental economics and its most common use lies in the field of behavioral finance.

  1. ^ Füllbrunn, Sascha, and Ernan Haruvy, eds. (2022) Handbook of Experimental Finance. Edward Elgar Publishing. https://www.e-elgar.com/shop/gbp/handbook-of-experimental-finance-9781800372320.html
  2. ^ Lucey, Brian M. (August 26, 2013). A New Journal – Journal of Behavioral and Experimental Finance. http://brianmlucey.wordpress.com/2013/08/26/a-new-journal-journal-of-behavioral-and-experimental-finance/

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