Development of the experimental economy in decision making
Over the years, the human being constantly seeks to develop his effectiveness capacity in decision making. That is why every so often a new theory or applicable method arises in order to provide security by making a decision whose consequences have an impact on society. One of them is the experimental economy, a formal method that serves to test economic theories through different experiments before being implemented in order to obtain greater assertiveness in the result.
The emergence of the experimental economy arises of thanks to Edward H. Chamberlin who had the idea of studying markets experimentally. He developed this experiment in a classroom of Harvard University with the help of some students who adopted the role of offers and plaintiffs in order to verify if the balance of the markets was fulfilled. His surprise was great when he discovered that the tranado price was much higher than the balance;However, this investigation did not stay there. Years later Vernon Smith, one of Chamberlin’s students and who is currently considered the main representative of the experimental economy continued to investigate and presented two jobs where he demonstrated with public information that prices converged to balance.
At the same time as the aforementioned method, the behavior economy arose which plays a very important role in the development of the experimental economy, since it studies the behavior of people and is responsible for providing information on the models that other disciplines such asSociology or psychology have already concluded. Likewise, the behavior economy uses the results of the experiments carried out in order to develop theoretical models of human behavior when it is in economic environments and its consequences.
The experimental economy makes use of some methods in order to receive truthful and sincere information from the experiment participants. First, some incentives such as money are used, since this is highly valued by all and is an insatiable good;that is, the more, the better. Second, the context in these experiments is almost null, since, if the participants receive a lot of information about this, the results collected could be altered and the theory could not be applied entirely. Finally, the groups who will be the objects of study must be rigorously chosen in such a way that their knowledge of the subject does not affect the results thrown in the test;In other words, students or teachers are considered not suitable for these types of experiments due to the knowledge they have of this.
The study of the behavior of individuals who are part of a society is very important for decision making. It is here where microeconomy and experimental economy are complemented. On many occasions, the experimental economy has been used in order to obtain results that demonstrate the behavior of an individual in the face of economic decision making which benefits microeconomy who based on these results can anticipate the behavior that so much will haveplaintiffs as offers against some change in the market.
In conclusion, the development of the experimental economy is very useful, since it allows us to contrast if the economic assumptions are actually fulfilled in addition to anticipating the economic reaction that arises when implementing any economic policy. Also, the behavior and experimental economy must work together because thanks to this they benefit, facilitating the work of the first and generating new theoretical models of behavior for the second. Finally, the experimental economy is of vital importance for microeconomics because both focus on the individual who makes economic decisions which have their balance and pricing in the market and pricing.
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