What makes Vernon Smith the experimental economics field's founding father? While still a Purdue University student, Vernon Smith started his first experiments on his students. He saw that players soon reached the competitive equilibrium of the game, even in the face of incomplete data and a small sample size. In opposition to conventional economic theory, he also pointed out that the requirements of perfect information and a sizable sample size are frequently far from a guarantee of equilibrium efficiency.
The paper "An Experimental Study of Market Behavior," which was published in the Journal of Political Economy in 1962 and is still regarded as the foundational work in the field of experimental economics, summarized Smith's earlier research.
After receiving immediate acclaim for his theories, Smith and other well-known economists soon resumed their studies. New aspects of markets, pricing, and economic agents' decision-making were gradually identified and examined as a result of experiments.
These days, a vast amount of literature based on experimental techniques is published, and the number of laboratories worldwide is continuously increasing.
Currently, the following sections are the focus of the majority of research: Public good games, non-cooperative games, and their equilibria, work in bilateral and multilateral trade, and the design of economic mechanisms Markets and market structures; financial markets and information; standard and expanded games; decision-making by individuals; cooperative games; field experiments
By no means is experimental economics restricted to these subjects. The majority of the experiments consist of multi-person cooperative games and surveys. Lastly, and maybe most importantly, experimental economics is a treasure trove of novel concepts and unconventional methods for studying economic theory.
