Vernon L. Smith: Economics

“Microeconomics, including the study of individual choice and of group choice in market and nonmarket processes, has generally been considered a field science as distinct from an experimental science. Hence microeconomics has sometimes been classified as "non-experimental" and closer methodologically to meteorology and astronomy than to physics and experimental psychology (Marschak, 1950, p. 3; Samuelson, 1973, p. 7). But the question of using experimental or nonexperimental techniques is largely a matter of cost, and generally the cost of conducting the most ambitious and informative experiments in astronomy, meteorology, and economics varies from prohibitive down to considerable. The cost of experimenting with different solar system planetary arrangements, different atmospheric conditions, and different national unemployment rates, each under suitable controls, must be regarded as prohibitive.”

Vernon L. Smith

Source: "Relevance of laboratory experiments to testing resource allocation theory," 1980, p. 345.

Question , Study , Science

“In defining a microeconomic system two distinct component elements will be identified: an environment and an institution. The environment consists of a list of N economic agents {l,…, N}, a list of K + 1 commodities (including resources) {O, l,…, K}, and certain characteristics of each agent … Hence, a microeconomic environment is defined by the collection of characteristics e”

Vernon L. Smith

e',...,e”
Source: "Microeconomic systems as an experimental science," 1982, p. 925.

“One of the most intriguing discoveries of experimental economics is that (1) as we have seen, people invariably behave non-cooperatively in small and large group ‘impersonal’ market exchange institutions; (2) many (up to half in single play; over 90% in repeat play) cooperate in ‘personal’ exchange (two-person extensive form games); (3) yet in both economic environments all interactions are between anonymous players.”

Vernon L. Smith

Source: "Constructivist and ecological rationality in economics," 2002, p. 528.

People , Game , Personality

“In the Autumn semester, 1955, I taught Principles of Economics, and found it a challenge to convey basic microeconomic theory to students. Why/how could any market approximate a competitive equilibrium? I resolved that on the first day of class the following semester, I would try running a market experiment that would give the students an opportunity to experience an actual market, and me the opportunity to observe one in which I knew, but they did not know what were the alleged driving conditions of supply and demand in that market”

Vernon L. Smith

Vernon L. Smith (2002) in: " Vernon L. Smith - Biographical http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2002/smith-bio.html". Nobelprize.org. Nobel Media AB 2013. Web. 13 Jun 2014.

Autumn

“I can switch out and go into a concentrated mode and the world is completely shut out. If I'm writing something, nothing else exists… Perhaps even more importantly, I don't have any trouble thinking outside the box. I don't feel any social pressure to do things the way other people are doing them, professionally. And so I have been more open to different ways of looking at a lot of the problems in economics.”

Vernon L. Smith

"Mildest autism has 'selective advantages'," 2005

People , World , Way , Feeling

“Economics as currently learned and taught in graduate school and practiced afterward is more theory-intensive and less observation-intensive than perhaps any other science. I think the statement that "no mere fact ever was a match in economics for a consistent theory" accurately describes the prevailing attitude in the profession”

Vernon L. Smith

Milgrom and Roberts, 1987, p. 185
Source: "Theory, experiment and economics," 1989, p. 151.

School , Thinking , Learning , Science

“In economics the tendency of theory to lag behind observation seems to be endemic, and, as theorists, few of us consider this to be a "terrible state." But as noted by Lakatos (1978, p. 6), "where theory lags behind the facts, we are dealing with miserable degenerating research programmes."”

Vernon L. Smith

Source: "Theory, experiment and economics," 1989, p. 168.

“Even though Hayek, in my view, is the leading economic thinker of the 20th century who saw what must be the mainsprings of the extended order, Mises was the choice technician, and no one was better at articulating the primacy of the individual and the need to define and nurture individual rights.”

Vernon L. Smith

Vernon L. Smith, in "Reflections on Human Action after 50 years", in Cato Journal, Vol. 9, No. 2. (Fall 1999).