Experimental Finance
2025
This chapter explores the emerging field of experimental finance, which utilizes controlled experiments to analyze behavior and outcomes within a financial context. This approach employs real incentives and systematic manipulation of variables to investigate causal relationships in financial decision-making. The chapter outlines various methodologies applied in diverse environments such as laboratories, online platforms, and field settings. It highlights the richness of financial datasets and the unique challenges posed by archival data analysis. By examining individual and group decision-making under risk and uncertainty, the chapter delves into the psychological and emotional factors influencing financial choices, connecting experimental finance to behavioral finance. Additionally, it reviews recent research topics, including algorithmic trading, monetary policy, and sustainable investments, illustrating how experimental finance serves as a valuable tool for testing and refining financial theories and informing policy design.