Final answer:
In Finance, experimental design can be used to study the effects of short-term incentives on financial advisor sales. The study would include control and experimental groups, with performance being the response variable.
Step-by-step explanation:
An example of the application of experimental design in Finance could include a study to determine whether short-term incentives influence financial advisor sales. Here are the components:
- Factors: These are the conditions that researchers manipulate, such as incentive types.
- Treatments: The different incentive plans given to advisors.
- Experimental units: The financial advisors participating in the experiment.
- Response variable: The sales performance of advisors after receiving incentives.
To set up the experiment, a financial company would establish a control group receiving standard commission and one or more experimental groups receiving different short-term incentives. Performance of these groups would be monitored to measure the impact of incentives on sales. Randomization and possibly blinding methods would be used to ensure the validity and reliability of the results.