METHODOLOGY

Although initially a lot of behavioural economics and finance theories were developed as the results of experimental observations and responses to surveys, today’s researchers are just as likely to something like a Magnetic Resonance Imaging (MRI) scans as used by the medical professional to determine which areas of a participant’s brain are more active when taking part in a certain experiment.

Researchers also rely heavily on market simulations such as trading games and auctions to determine what impact a particular bias such as stress or greed may have upon individual or group behaviour. Although behaviour can typically be explained in variety of ways, these experiments are carefully engineered to limit these various explanations – usually by involving real money and real transactions which are binding to ensure experiments are as close to real-world scenarios as possible.