Vernon Smith, Economic Experiments, and the Visible Hand
"When Smith ran these first experiments, the mechanics of the invisible hand became visible for the first time." "The Swedish Nobel Committee has awarded the 2002 Nobel Prize in economics to Vernon L. Smith, an economist at George Mason University. The committee noted that this award was based upon Smith "having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms." I join the committee in saluting Smith. I was a student of Smith's when I studied for my Ph.D. at the University of Arizona in the late 1970s. He has had a profound affect upon my own career, other students, and a large body of the public who has probably never heard of him. But what exactly are market experiments and what can researchers learn from them? What importance, outside of the academy, is the "study of alternative market mechanisms?" In this essay I explore these questions. Vernon L. Smith ZOOM ...