What Is Experimental Economics?
What Is Experimental Economics?Answer: Experimental Economics – How I Would Define It Most applied work in economics is used by collecting ‘real world’ data from decisions made outside of the economist’s control. Suppose we wanted to know how changes in the minimum wage impacts the unemployment rate for young workers. We would look for states, provinces or countries where there was a change in the minimum wage and then examine unemployment data both prior to the minimum wage law and after the minimum wage law. However, there is no possible way to be absolutely certain that any change in the unemployment rate was caused by the change in the minimum wage. We cannot be sure of the causal relationship because there are so many outside factors going on in an economy. Perhaps the unemployment rate rose, not due to the minimum wage cut, but because the Federal Reserve cut interest rates or because of a spike in oil prices. Experimental economics attempts to eliminate these outside factors by
