Nobel: Smith does go "beyond the traditional"

[Roger Koppl <koppl@xxxxxxx>]

Mat,

Apparently, Smith started out thinking that "neoclassical" results would
hold up in his experiments.  But he kept getting these anomalies.  Various
market structures were pretty good at extracting the gains from trade, but
individuals were not "rational" in the neoclassical sense.  Thus, he went in
search of a new model of human action.  And he found it in the evolutionary
psychology of Cosmides & Tooby and related thinkers. See his presidential
address to the Southern Economic  Association.  (Sorry, I don't have the
proper reference for that.)  For an application in which MRI brain scans are
taken (!), see McCabe, K., D. Houser, L. Ryan, V. Smith, and T. Trouard.
2001. "A functional imaging study of cooperation in two-person reciprocal
exchange," PNAS, 98(20): 11832-11835.

Thus, Smith has traveled  very far "beyond the traditional assumption
of rational human economic behavior driven by self interest," very far
indeed.  On the other hand, I think the Nobel committee cited only his
experimental work, especially his contributions to experimental methodology,
not his relatively recent interest in evolutionary psychology.

Smith also favorably cites Hayek quite a bit.  How ever you might judge
him, Hayek does not invoke the "traditional assumption of rational human
economic behavior driven by self interest."

Cheers,

Roger
-------------------------------------------
Roger Koppl
Professor of Economics and Finance
Fairleigh Dickinson University
Madison, NJ 07940
USA

World Wide Web: http://inside.fdu.edu/pt/koppl.html
Internet: koppl@xxxxxxx
Phone: (973) 443-8846
Fax: (973) 443-8377
-----------------------------------------

--