Re: [Fwd: nobel]

["Forstater, Mathew" <forstaterm@xxxxxxxx>]

I don't understand how Smith has gone "beyond the traditional assumption
of rational human economic behavior driven by self interest". I admit
that he may have and I just don't know about it. But his thing has been
experimental economics, and most of what I have seen has tried to
'prove' traditional economic theory through lab experiments (not the
rats in cages stuff, more college students making lunch money answering
questions or playing auction games).

I met him once when he gave a talk where I was teaching at the time. He
is a 'Marshallian', since when he is 'testing' a particular market, he
has to assume ceteris paribus for everything else.  So he talked about
how in these fabricated experiments, the 'market' always tends to an
equilibrium solution, establishing an equilibrium price, etc. So I asked
him, "I thought that in Marshall, in equilibrium price equals cost of
production?" I thought for sure he would have a good answer, I just was
interested to find out what it was. He obviously had never given it a
thought and said as much.

-----Original Message-----
From: Sven R Larson [mailto:slarson@xxxxxxxxxxxx]
Sent: Wednesday, October 09, 2002 1:47 PM
To: pkt@xxxxxxxxxxxxxxxx
Subject: [Fwd: nobel]


Americans Daniel Kahneman and
                 Vernon Smith shared the 2002 Nobel economics
                 prize on Wednesday for work on how psychology
                 affects people's buying decisions, and for
                 developing laboratory experiments in economics.
                 The Royal Swedish Academy of Sciences said that
                 Kahneman, 68, and Smith, 75, will share the
                 prestigious $1 million prize for groundbreaking
                 studies beyond the traditional assumption of rational
human
                 economic behavior driven by self interest.