I cannot wait to read the autobiography of Vernon Smith, easily one of the most fascinating people in the field of economics. He shared the 2002 Nobel Prize in Economics with Daniel Kahneman for his pioneering work in experimental economics. This was one of the most interesting years for the Nobel Prize because Khaneman's lab work in behavioral economics showed that people are systematically irrational while Smith's lab work, in sharp contrast, showed that markets perform remarkably efficiently, even with a small number of buyers and sellers. There is a 30 minute interview with the two giants on the Nobel Prize web site here.Vernon Smith is about as free-market as they come, and has a profound respect for the work of Adam Smith and Friedrich Hayek. But his work is some of the first to show quantiatively, unequivically just how efficiently markets operate. Interestingly, Smith was originally skeptical of traditional economic orthodoxy and designed the experiments for his class to prove that markets don't actually operate how theory predicts. But to his disbelief, the experiments showed time and time again that markets tend toward the efficient price and output. For more on Smith's work and philosophy, I recommend listening to either of his two EconTalk interviews.
I've been fascinated with Smith's work ever since I saw him give a talk at NC State a few years ago. For awhile, it was my intention to go to graduate school at George Mason to hopefully study experimental economics with Smith's group, but he left for a small school in California called Chapman University that does not offer a graduate program in economics. (This is surprising considering that the school's president, James L. Doti, is a well-known economist and a member of the Governator's Council of Economic Advisors.)
Smith's former colleague, Tyler Cowen, offers a review of Smith's autobiography the way only Tyler Cowen can -- with incredible succinctness and clarity.
Here is a quote from the back flap of the book:
Any three-year-old can force you to the outermost limits of your knowledge by asking , "Why?" three times in response to any answer. It is a soberting observation that all children pass through a short "repeat-why" stage, pressing to identify the limits of what is known, before they learn to stop asking and arbitrarily accept living with less, a state that I have found troubling...throughout my life.
