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 market-like settings.
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.
The methodology of experimental finance is closely related to that of Experimental economics.
Famous quotes containing the words experimental and/or finance:
“Philosophers of science constantly discuss theories and representation of reality, but say almost nothing about experiment, technology, or the use of knowledge to alter the world. This is odd, because ‘experimental method’ used to be just another name for scientific method.... I hope [to] initiate a Back-to-Bacon movement, in which we attend more seriously to experimental science. Experimentation has a life of its own.”
—Ian Hacking (b. 1936)
“A bank is a confidence trick. If you put up the right signs, the wizards of finance themselves will come in and ask you to take their money.”
—Christina Stead (1902–1983)