:Vernon L. Smith

Smith was born in Wichita, Kansas, where he attended Wichita North High School and Friends University. Grover Bougher, Vernon's mother's first husband, who worked as a fireman on the Santa Fe railroad, died in an accident. The life insurance money provided by the Santa Fe railroad was invested in a farm which became the sole means of survival for Vernon's family during the tough years of the Great Depression. His future interests were influenced by his childhood at the farm.{{Cite web| url=https://www.nobelprize.org/prizes/economic-sciences/2002/smith/biographical/| title=Early life| access-date=2020-11-25| archive-date=2020-11-30| archive-url=https://web.archive.org/web/20201130101659/https://www.nobelprize.org/prizes/economic-sciences/2002/smith/biographical/| url-status=live}}

Smith received his bachelor's degree in electrical engineering from Caltech in 1949, an M.A. in economics from the University of Kansas in 1952, and his Ph.D. in economics from Harvard University in 1955. His Ph.D. thesis title was A theoretical and empirical inquiry into the economic replacement of capital equipment.

{{cite thesis |type=Ph.D. thesis |publisher=Harvard University |publication-place= |last=Smith |first=Vernon |date=1955 |title=A theoretical and empirical inquiry into the economic replacement of capital equipment |oclc=754082102 |hdl= |doi= |osti= |url= }}

Smith's first teaching post was at the Krannert School of Management, Purdue University, which he held from 1955 until 1967, attaining the rank of full professor.

Smith also taught as a visiting associate professor at Stanford University (1961–1962) and there made contact with Sidney Siegel, who was also doing work in experimental economics. Smith moved with his family to Massachusetts and got a position first at Brown University (1967–1968) and then at the University of Massachusetts (1968–1972). Smith also received appointments at the Center for Advanced Study in the Behavioral Sciences (1972–1973) and Caltech (1973–1975).

Much of the research that earned Smith the Nobel Memorial Prize in Economic Sciences was conducted at the University of Arizona between 1976 and 2001. In 2001, Smith left Arizona for George Mason University.{{Cite magazine |last1=Steelman |first1=Aaron |title=Interview: Vernon Smith |url=https://www.richmondfed.org/-/media/richmondfedorg/publications/research/region_focus/2003/spring/pdf/interview.pdf |magazine=Region Focus |publisher=Federal Reserve Bank of Richmond |date=Spring 2003 |access-date=2017-10-21 |archive-date=2017-05-01 |archive-url=https://web.archive.org/web/20170501000205/https://www.richmondfed.org/-/media/richmondfedorg/publications/research/region_focus/2003/spring/pdf/interview.pdf |url-status=live }} From 2003 to 2006, he held the Rasmuson Chair of Economics at the University of Alaska Anchorage.{{cite journal|last1=Chapman|first1=Tim|title=Profile: Vernon L. Smith – Bringing economics into the laboratory|journal=Quantitative Finance|date=August 2003|volume=3|issue=4|pages=C58–C60|doi=10.1088/1469-7688/3/4/601|bibcode=2003QuFin...3C..58C|s2cid=156032346}}{{cite news|title=UAA celebrates 10th anniversary of Rasmuson Chair of Economics|url=http://greenandgold.uaa.alaska.edu/blog/19861/uaa-celebrates-10th-anniversary-rasmuson-chair-economics/|access-date=2017-10-21|work=Green & Gold News|publisher=University of Alaska Anchorage|date=November 27, 2013|archive-date=2017-10-21|archive-url=https://web.archive.org/web/20171021220737/http://greenandgold.uaa.alaska.edu/blog/19861/uaa-celebrates-10th-anniversary-rasmuson-chair-economics/|url-status=live}} In 2008, Smith founded the Economic Science Institute at Chapman University in Orange, California.{{cite web|title=About ESI|url=https://www.chapman.edu/research/institutes-and-centers/economic-science-institute/about-us/index.aspx|website=Chapman University|access-date=2017-10-21|archive-date=2017-10-22|archive-url=https://web.archive.org/web/20171022032534/https://www.chapman.edu/research/institutes-and-centers/economic-science-institute/about-us/index.aspx|url-status=live}}

Smith has served on the board of editors of the American Economic Review, the Cato Journal, Journal of Economic Behavior and Organization, Science, Economic Theory, Economic Design, and the Journal of Economic Methodology.{{cite web|title=Vernon L. Smith: CV|url=https://www.chapman.edu/our-faculty/files/curriculum-vita/Smith-Vernon-CV.pdf|publisher=Chapman University|access-date=May 11, 2018|archive-date=May 11, 2018|archive-url=https://web.archive.org/web/20180511081110/https://www.chapman.edu/our-faculty/files/curriculum-vita/Smith-Vernon-CV.pdf|url-status=live}} He also served as an expert for the Copenhagen Consensus.{{cite web|title=Experts|url=http://www.copenhagenconsensus.com/expert|website=Copenhagen Consensus Center|access-date=2017-10-21|archive-date=2017-10-21|archive-url=https://web.archive.org/web/20171021222517/http://www.copenhagenconsensus.com/expert|url-status=live}}

Smith began his work in experimental economics at Purdue University. As Smith describes it:

{{blockquote|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.{{Nobelprize|accessdate=2020-10-22}}}}

In framing the experiment, Smith varied certain institutional parameters seen in the first classroom economics experiments as conducted by Edward Chamberlin: in particular, he ran the experiments for several trading periods, to give the student subjects time to train.{{cite book | author = Ross Miller | title = Paving Wall Street: Experimental Economics and the Quest for the Perfect Market | pages = [https://archive.org/details/pavingwallstreet00mill/page/73 73–74] | publisher = John Wiley & Sons | location = New York | year = 2002 | isbn = 978-0-471-12198-5 | title-link = Paving Wall Street }}

At Caltech, Charles Plott encouraged Smith to formalize the methodology of experimental economics, which he did in two articles. In 1976, "Experimental Economics: Induced Value Theory" was published in the American Economic Review (AER).Smith 1976 It was the first articulation of the principle behind economic experiments. Six years later, these principles were expanded in "Microeconomic Systems as an Experimental Science," also in the AER. This paper adapts the principles of mechanism design, a microeconomic system developed by Leonid Hurwicz, to the development of economic experiments. In Hurwicz's formulation, a microeconomic system consists of an economic environment, an economic institution (or economic mechanism), and an economic outcome. The economic environment is simply the preferences of the people in the economy and the production capabilities of the firms in the economy. The key insight in this formulation is that the economic outcome can be affected by the economic institution. The mechanism design provides a formal means for tests of the performance of an economic institution, and experimental economics, as developed by Smith, provided a means for formal empirical assessment of the performance of economic institutions. The second main contribution of the paper is to the technique of induced values, the method used in controlled laboratory experiments in economics, political science, and psychology, which allows experimental economists to create a replica of a market in a laboratory. Subjects in an experiment are told that they can produce a "commodity" at a cost and then sell it to buyers. The seller earns the difference between the price received and its cost. Buyers are told that the commodity has a value to them when they consume it, and they earn the difference between the value of the commodity to them and its price. Using the technique, Smith and his coauthors have examined the performance of alternative trading mechanisms in resource allocation.Smith 1982

In February 2011, Smith participated in the "Visiting Scholars Series" at the Nicholas Academic Centers in Santa Ana, California, conducted in collaboration with Chapman University. Smith and his colleague Bart Wilson conducted experiments designed to expose high school students from underserved neighborhoods to market dynamics and how concepts such as altruism influence economic behavior.{{cite news|last1=Mickadeit|first1=Frank|title=Nobelist gives teens Econ 101 lesson|url=http://www.ocregister.com/2011/01/30/nobelist-gives-teens-econ-101-lesson/|access-date=2017-10-21|work=The Orange County Register|date=2011-01-30|archive-date=2017-09-10|archive-url=https://web.archive.org/web/20170910083442/http://www.ocregister.com/2011/01/30/nobelist-gives-teens-econ-101-lesson/|url-status=live}}

Smith has authored or coauthored articles and books on capital theory, finance, natural resource economics and experimental economics. He was also one of the first to propose the combinatorial auction design, with Stephen J. Rassenti and Robert L. Bulfin in 1982.Rassenti, Smith, and Bulfin 1982

In January 2009, Smith signed a public petition opposing the passage of the American Recovery and Reinvestment Act.{{cite web | url=http://cato.org/special/stimulus09/cato_stimulus.pdf | title=Cato Institute petition against Obama 2009 stimulus plan | access-date=2018-12-12 | archive-url=https://web.archive.org/web/20090203170743/http://cato.org/special/stimulus09/cato_stimulus.pdf | archive-date=2009-02-03 | url-status=dead }} In a 2010 Econ Journal Watch study, Smith was found to be one of the most active petition-signers among US economists.Hedengren, David, Daniel B. Klein, and Carrie Milton. "Economist Petitions: Ideology Revealed", Econ Journal Watch 7[3]: 288–319, Sept 2010. [http://econjwatch.org/issues/volume-7-issue-3-september-2010] {{Webarchive|url=https://web.archive.org/web/20180424184930/https://econjwatch.org/issues/volume-7-issue-3-september-2010|date=2018-04-24}}

The Vernon Smith Prize for the Advancement of Austrian Economics is named after him and is sponsored by the European Center of Austrian Economics.{{Cite web | url=http://www.coordinationproblem.org/2011/11/vernon-smith-prize-contest-information.html | title=Vernon Smith Prize Contest Information | access-date=2012-02-03 | archive-date=2012-01-22 | archive-url=https://web.archive.org/web/20120122161844/http://www.coordinationproblem.org/2011/11/vernon-smith-prize-contest-information.html | url-status=live }}

Vernon Smith is renowned for his seminal contributions to the elucidation of spontaneous order{{cite web |title=Spontaneous Order |url=https://en.wikipedia.org/wiki/Spontaneous_order |website=Wikipedia |access-date=April 13, 2024}} within the field of economics. He posits spontaneous order as the organic emergence of structure and coherence from apparent disorder, a phenomenon ubiquitously observed in both social and economic contexts. His work on this has even extended out to using methods of self-organization{{cite web | title=Self-organization |url=https://en.wikipedia.org/wiki/Self-organization}} from the physical sciences to model sociability. {{cite journal |author=Michael J. Campbell and Vernon L. Smith |title=An elementary humanomics approach to boundedly rational quadratic models |journal=Physica A |volume=562 |year=2021 |page=125309 |doi=10.1016/j.physa.2020.125309|bibcode=2021PhyA..56225309C |url=https://digitalcommons.chapman.edu/esi_working_papers/330/ |url-access=subscription }} Smith has expounded upon the notion of spontaneous order in the context of his pedagogical endeavors as well. In his instructive course titled "Spontaneous Order and the Law" at the Fowler School of Law, Chapman University,{{cite web |url=https://www.chapman.edu/law/index.aspx |website=Chapman.edu |access-date=April 13, 2024 |title=Fowler School of Law }} he illuminates how social norms and legal frameworks emerge organically through human interaction, gradually coalescing from apparent chaos into structured societal systems.

In recent years, Vernon L. Smith's research has expanded to include the study of Neuroeconomics{{cite web |title=Neuroeconomics |url=https://en.wikipedia.org/wiki/Neuroeconomics |website=Wikipedia |access-date=April 13, 2024}}{{Circular reference|date=August 2024}} as seen in Law & Neuroeconomics Smith (2000),{{cite journal |last1=Chorvat |first1=Terrence |title=Law and Neuroeconomics |url=https://www.jstor.org/stable/3655300 |journal=Supreme Court Economic Review |date=2005 |volume=13 |pages=35–62 |doi=10.1086/scer.13.3655300 |jstor=3655300 |access-date=April 13, 2024|url-access=subscription }} where he integrates economic theory with neuroscience to understand decision-making processes. Vernon Smith's work in this area has led to new insights into how brain activity influences economic decisions. Additionally, he has been instrumental in promoting the use of experimental methods in economics education, advocating for a hands-on approach to learning economic concepts. Some of these contributions were used in Neuroeconomics Lab{{cite web |url=https://www.neuroeconomicslab.org/ |website=Neuroeconomics Lab |access-date=April 13, 2024}} books published by Academic Press (2014).

In February 2005, Smith publicly attributed features of his personality to Asperger syndrome{{cite news |last=Herera |first=Sue |date=25 February 2005 |url=http://www.nbcnews.com/id/7030731 |title=Mildest autism has 'selective advantages' |work=NBC News |access-date=2006-03-27 |archive-date=2013-09-13 |archive-url=https://web.archive.org/web/20130913121130/http://www.nbcnews.com/id/7030731 |url-status=dead }} after a process of self-diagnosis.

• {{Cite book |last1=Gjerstad |first1=Steven D. |last2=Smith |first2=Vernon L. |date=2014 |title=Rethinking Housing Bubbles |location=New York |publisher=Cambridge University Press |isbn=978-0521198097 }}
• {{Cite book |last1= Gjerstad |first1=Steven |last2= Smith |first2=Vernon L. |editor-last=Miniter |editor-first=Brendan |title=The 4% Solution: Unleashing the Economic Growth America Needs |place=New York |publisher=Crown Business |year=2012 |pages=345–377 |chapter=At Home in the Great Recession |isbn=9780307986146|title-link=The 4% Solution: Unleashing the Economic Growth America Needs }}
• {{Cite journal |last1= Gjerstad |first1=Steven D. |last2= Smith |first2=Vernon L. |year= 2013 |title=Balance Sheet Crises: Causes, Consequences, and Responses |journal=Cato Journal |volume=33 |issue=3 |pages=437–470|url=https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2013/9/cjv33n3-10.pdf |access-date=2017-10-21 }}
• Plott, Charles R., and Vernon L. Smith, ed. (2008). Handbook of Experimental Economics Results, v. 1, Elsevier. [https://web.archive.org/web/20090403024024/http://www.elsevier.com/wps/find/bookdescription.cws_home/601504/description#description Description] and [https://books.google.com/books?id=wAK_aKs3EPoC&pg=PR13=GBS_GE_SUMMARY_R preview].
• {{Cite journal |doi=10.2307/3003463 |last=Rassenti |first=Stephen J. |author2=Smith, Vernon L. |author3=Bulfin, Robert L. |year=1982 |title=A Combinatorial Auction Mechanism for Airport Time Slot Allocation |journal=The Bell Journal of Economics |volume=13 |issue= 2|pages=402–417 |url=http://www.eecs.harvard.edu/~parkes/cs286r/spring02/papers/rassenti82.pdf |jstor=3003463 }}
• {{Cite journal |last=Smith |first=Vernon L. |year=1962 |title=An Experimental Study of Competitive Market Behavior |journal=Journal of Political Economy |volume=70 |issue=2 |jstor=1861810 |pages=111–137 |doi=10.1086/258609 |s2cid=54718519 |url=http://digitalcommons.chapman.edu/cgi/viewcontent.cgi?article=1027&context=economics_articles |url-access=subscription }}
• _____ (1976). {{Cite journal|title=Experimental Economics: Induced Value Theory|journal=American Economic Review|volume=66|issue=2|pages=274–279|url=http://www.lrz–muenchen.de/~u516262/webserver/webdata/smith1976_experimentaleconomics_aer.pdf}}{{Dead link|date=July 2018 |bot=InternetArchiveBot |fix-attempted=yes }}
• {{Cite book |last=Smith |first=Vernon L. |editor-last1=Kmenta |editor-first1=Jan |editor-last2=Ramsey |editor-first2=James B. |title=Evaluation of Econometric Models |publisher=Academic Press |year=1980 |pages=[https://archive.org/details/evaluationofecon0000unse/page/345 345–377] |chapter=Relevance of Laboratory Experiments to Testing Resource Allocation Theory |chapter-url=https://www.nber.org/chapters/c11710.pdf |isbn=978-0-12-416550-2 |url=https://archive.org/details/evaluationofecon0000unse/page/345 }}
• _____ (1982). {{Cite journal |title=Microeconomic Systems as an Experimental Science |journal=American Economic Review |volume=72 |issue=5 |pages=923–955|url=http://www.cs.princeton.edu/courses/archive/spring06/cos444/papers/smith82.pdf }}
• _____ (1991). Papers in Experimental Economics [1962–88], Cambridge. [https://books.google.com/books?id=zIjzN0UZ9G4C Description] and chapter-preview [https://books.google.com/books?id=zIjzN0UZ9G4C&pg=PR7=ONEPAGE links].
• _____ (2000). Bargaining and Market Behavior: Essays in Experimental Economics [1990–98], Cambridge. [http://www.cambridge.org/gb/knowledge/isbn/item1155061/?site_locale=en_GB Description] and chapter-preview [https://books.google.com/books?id=Ngo0aiw3pMgC&pg=PR9=ONEPAGE links.]
• _____ (2003). {{Cite journal |title=Constructivist and Ecological Rationality in Economics |journal=American Economic Review |volume=93 |issue=3 |pages=465–508 |doi=10.1257/000282803322156954 |url=http://nobelprize.org/nobel_prizes/economics/laureates/2002/smith-lecture.html |year=2003|last1=Smith|first1=Vernon L.|citeseerx=10.1.1.501.5291|s2cid=16505135 }}
• _____ ([1987] 2008a). "experimental methods in economics." The New Palgrave Dictionary of Economics, 2nd Edition, [http://www.dictionaryofeconomics.com/article?id=pde2008_E000186&q=Experimental%20economics&topicid=&result_number=2 Abstract.]
• _____ (2008b). "experimental economics," The New Palgrave Dictionary of Economics, 2nd Edition, [http://www.dictionaryofeconomics.com/article?id=pde2008_E000277&q=experimental%20&topicid=&result_number=2 Abstract.]
• {{Cite journal |last1=Williams |first1=Arlington W. |last2=Ledyard |first2=John O. |last3=Gjerstad |first3=Steven |last4=Smith |first4=Vernon L. |year=2000 |title=Concurrent Trading in Two Experimental Markets with Demand Interdependence|journal=Economic Theory |volume=16 |issue=3 |pages=511–528 |jstor=25055346 |doi=10.1007/s001990050002 |citeseerx=10.1.1.22.1763 |s2cid=195227181 }} Reprinted in Timothy N. Cason and Charles Noussair, ed. (2001), Advances in Experimental Markets, pp. [https://books.google.com/books?id=fCd_bG7oQWcC&pg=PA15 15–] 32.
• Chorvat, T., McCabe, K., & Smith, V. (2005). Law and Neuroeconomics. Supreme Court Economic Review{{cite journal |last1=Chorvat |first1=Terrence |title=Law and Neuroeconomics |journal=Journal of Economic Literature |date=2005 |volume=43 |pages=9–64 |jstor=3655300 |url=https://www.jstor.org/stable/3655300 |access-date=14 April 2024}}

• List of economists

{{Reflist|2}}

{{Wikiquote|Vernon L. Smith}}

• [https://www.chapman.edu/our-faculty/vernon-smith Dr. Vernon L Smith] at Chapman University School of Law
• [http://www.independent.org/aboutus/person_detail.asp?id=671 Member of the Board of Advisors] at The Independent Institute
• [http://www.cato.org/people/vernon-smith Senior Fellow] at Cato Institute
• {{Cite encyclopedia |title=Vernon L. Smith (1927– ) |url=http://www.econlib.org/library/Enc/bios/Smith.html |encyclopedia=The Concise Encyclopedia of Economics |edition=2nd |series=Library of Economics and Liberty |publisher=Liberty Fund |year=2008 }}
• {{cite web |last=Roberts |first=Russ |title=Vernon Smith Podcasts |url=http://www.econtalk.org/archives/_featuring/vernon_smith/ |work=EconTalk |publisher=Library of Economics and Liberty |author-link=Russ Roberts}}
• {{cite web |url=https://library.duke.edu/rubenstein/findingaids/smithvernon/ |title=Vernon L. Smith Papers, 1938–2007 and undated |publisher=Rubenstein Library, Duke University |access-date=2017-10-21}}
• {{Google Scholar id|LGCdDW0AAAAJ}}
• {{Nobelprize}}
• {{cite web |title=Chapman University Fowler School of Law |url=https://www.chapman.edu/law/index.aspx |website=Chapman |access-date=April 13, 2024}}
• Spontaneous Order{{cite web |title=Spontaneous Order |url=https://en.wikipedia.org/wiki/Spontaneous_order |website=Wikipedia |access-date=14 April 2024}}{{Circular reference|date=August 2024}}
• Neuroeconomics{{cite web |title=Neuroeconomics |url=https://en.wikipedia.org/wiki/Neuroeconomics |website=Wikipedia |access-date=14 April 2024}}{{Circular reference|date=August 2024}}
• Academic Press{{cite web |title=Academic Press |url=http://en.wikipedia.org/wiki/Academic_Press |website=Wikipedia |access-date=14 April 2024}}{{Circular reference|date=August 2024}}
• Neuroeconomics Lab{{cite web |title=Neuroeconomics Lab |url=https://www.neuroeconomicslab.org/ |website=NeuroeconomicsLab.org |access-date=April 13, 2024}}

• [http://trumanfactor.com/2011/vernon-smith-interview-6949.html "Default is not the end of the world"] Interview with Vernon Smith by Luis Martin (Winter 2011)
• [https://web.archive.org/web/20061105114721/http://www.cato.org/pubs/journal/cj19n2/cj19n2-1.pdf Reflections On Human Action After 50 Years] by Vernon L. Smith, Cato Journal, Fall 1999
• [https://web.archive.org/web/20061222071506/http://www.cato.org/pubs/journal/cj21n3/cj21n3-11.pdf "Using Experiments to Inform the Privatization/Deregulation Movement in Electricity,"] by Stephen J.Rassenti, Vernon L. Smith, and Bart J.Wilson, Cato Journal, Winter 2002
• [https://www.wsj.com/articles/SB119794091743935595 The Clinton Housing Bubble], Vernon L. Smith, The Wall Street Journal, December 18, 2007
• [https://www.wsj.com/articles/SB123897612802791281 From Bubble to Depression?], Steven Gjerstad and Vernon L. Smith, The Wall Street Journal, April 6, 2009

{{s-start}}

{{s-ach|aw}}

{{s-bef | before = George A. Akerlof | before2 = A. Michael Spence | before3 = Joseph E. Stiglitz }}

{{s-ttl | title = Laureate of the Nobel Memorial Prize in Economics | years = 2002 | alongside = Daniel Kahneman }}

{{s-aft | after = Robert F. Engle III | after2 = Clive W.J. Granger }}

{{s-end}}

{{Nobel laureates in economics 2001-2025}}

{{2002 Nobel Prize winners}}

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{{DEFAULTSORT:Smith, Vernon L.}}

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