Lithuania will see the first demonstration of economic experiments inspired by the economist and winner of the Nobel Prize, Dr. Vernon Smith. Participants of the experiments, conducted by researchers from the prestigious Chapman University in California, will be rewarded monetarily and will try to comprehend market rules and search for better business models. The seminar on experimental economics will be held from 6 to 8 April at ISM University of Management and Economics.

“If experimental economics was developed and applied in practice, it should be capable of helping to build an effectively functioning economy,” assert the representatives of ISM University of Management and Economics. Next week, ISM will invite the academic community and practitioners to the first session in Lithuania, as well as the entire Central and Eastern European Region, of seminars on experimental economics.

Experimental economics is a particularly innovative method of scientific research employed to reveal human socioeconomic behaviour and to help build and develop different market economy mechanisms. Seminar participants will learn how to conduct experiments and test human economic behaviour as well as possibilities of market function.

“This event is of high significance for Lithuania. Led by the educational mission, colleagues of the economist and Nobel Prize winner Dr. Vernon Smith will conduct these seminars. Since we still don’t have a fully functioning market economy in our country (only the legislative framework), the science and methods of experimental economics could help to model our market institutions and solve such relevant issues as managing public utilities, airlines, housing and similar markets, organising the distribution of electricity, radio frequencies, water and other private and public resources, cutting the powers of monopolies, and increasing market efficiency,” says the Dean of Human Resources of ISM University of Management and Economics, Šarūnas Abramavičius.

According to him, the research method is supposed to supplement, or even replace, the now popular polls surveying human economic behaviour in the near future. ISM University of Management and Economics is planning to integrate experimental economics as a research method and a tool for economic analysis into the study programmes offered to its students. The dean states that the subject is brand new in Central and Eastern Europe, and even in many U.S. universities.

During the seminar sessions, economic laboratory methods will be presented to management and economics lecturers and students from Lithuanian and other Central and Eastern European universities, representatives of public institutions, and management and economics practitioners. The seminars are organised and fully financed by ISM University of Management and Economics and the International Foundation for Research in Experimental Economics (IFREE).

The seminars will be conducted by one of the founders of the Economic Science Institute at Chapman University (California, the USA), Professor of Economics and Law, Bart J. Wilson, and his colleague, Doctor of ESI at Chapman University, Rimvydas Baltaduonis.

“The interesting thing is that participants of these seminars, which are partially or fully financed by the International Foundation for Research in Experimental Economics, receive monetary rewards depending on their decisions made during the experiments. The major goal is to make the presentation of the methods and possibilities of economic experiments as clear and understandable as possible. The involvement of seminar participants in this type of educational experimentation proved to be especially effective. These seminars will also rely on the same practice. Discussions are still ongoing about the influence of monetary rewards on the decisions done by participants in the experiment. The participants of this session will be provided with a practical opportunity to test the theory of Prof. Vernon L. Smith, the winner of the Nobel Prize in Economics, stating that a monetary reward is necessary,” claims Mr. Abramavičius.

About the International Foundation for Research in Experimental Economics
The International Foundation for Research in Experimental Economics (IFREE) was established in 1997 by Professor Vernon L. Smith who was awarded the Nobel Prize in Economics in 2002 for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms. One of the aims of IFREE is to spread the knowledge of experimental economics through hands-on training and seminars, where real market conditions are created to enable seminar participants to better perceive market processes. In 2008, Prof. V. L. Smith and his colleagues, among whom was Prof. Bart J. Wilson, established the Economic Science Institute (ESI) at Chapman University. The institute uses the laboratory method of inquiry to expand our understanding of human socioeconomic behaviour and develop and test market economy models. More about IFREE

The method of experimental economics is used to determine human socioeconomic behaviour. The research mission is to study the function and origin of human institutions and to build and test various market models and management systems. The research spans the fields of accounting, economics, finance, information systems, engineering, psychology, political science, neuroscience, computer science, and philosophy. Prior to the development of experimental economics, economists focused on theories relying heavily on mathematical abstractions about how people behave and how markets work. In fact, markets in natural environments are dynamic and operate in specialised institutional settings. Using cash-motivated students, experiments create real-world incentives to help us better understand why markets and other exchange systems work the way they do. More about experimental economics