The Nobel Prize in Behavioral and Experimental Economics: A Contextual and Critical Appraisal of the Contributions of Daniel Kahneman and Vernon Smith

Posted: 23 May 2008

Abstract

Daniel Kahneman and Vernon Smith were the joint recipients of the 2002 Nobel Prize in Economics. Kahneman's work challenges the assumption that individuals behave in a manner consistent with conventional economic wisdom. He maintains that individuals tend to be systematically error prone and possibly irrational. Smith, on the other hand, developed experiments and experimental environments to test hypotheses emanating from the conventional economic wisdom. Smith finds that, in spite of Kahneman's work, economic agents are rational and that economies are efficient. These differing views are discussed and placed in the context of the methodological and public policy debates in economics.

Keywords: Nobel prize, behavioral, experimental, Smith, Kahneman, rationality, heuristics, biases

JEL Classification: A11, B15, B20, B41, C90, Z10

Suggested Citation

Altman, Morris, The Nobel Prize in Behavioral and Experimental Economics: A Contextual and Critical Appraisal of the Contributions of Daniel Kahneman and Vernon Smith. Review of Political Economy, Vol. 16, No. 1, 2004. Available at SSRN: https://ssrn.com/abstract=1134241

Morris Altman (Contact Author)

University of Newcastle ( email )

University Drive
Callaghan, NSW 2308
Australia

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