What is experimental economics?
During the 1950’s, Vernon L. Smith started studying economic theories through the implementation of experimental methodology as means of testing theories regarding the functioning of markets. Since then, experimental methodology has become a useful tool for the study of the economic sciences. As an acknowledgement of his work, Vernon Smith shared the 2002 Nobel Memorial Prize in Economic Sciences with Daniel Kahneman for his contribution to the development of experimental economics.
This form of empirical analysis enables us to better comprehend the foundations of human behavior, as well as the characteristics of markets and other exchange mechanisms, since they let us observe the conduct of people who face real incentives.