Vernon Smith on Behavioral in 2008
04 Feb 2022 Leave a comment
Like last week, this post is adjacent to the internet chattering over whether behavioral economics is “dead”.
Vernon Smith wrote a book Rationality in Economics that came out in 2008. I’m going to pull some quotes from that book that I think are relevant. This is not an attempt to summarize the main point of the book.
I began developing and applying experimental economics methods to the study of behavior and market performance in the 1950s and 1960s…
Preface, pg xiii
Repetitive or real-time action in incomplete information environments is an operating skill different from modeling based on the “given” information postulated to drive the economic environment that one seeks to understand in the sense of equilibrium, optimality, and welfare. This decision skill is based on a deep human capacity to acquire tacit knowledge that defies all but fragmentary articulation in natural or written language.
Preface, pg xv
I think…
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Teaching Price Controls (Poorly)
04 Feb 2022 Leave a comment
Economics textbooks differ in their treatment of price controls. None of them does a great job, in my opinion. The reason is mostly due to the purpose of textbooks. Despite what you might suspect, most undergraduate textbooks are not used primarily to give students an understanding of the world. They are often used as a bound list of things to know and to create easy test questions. If a textbook has to change the assumptions of a model too much from what the balance of the chapter assumes, then the book fails to make clear what students are supposed to know for the test.
I think that this is the most charitable reason for books’ poor treatment of price controls – even graduate level books. The less charitable reasons include sloppy exposition due to author ignorance or an over-reliance on math. I honestly would have trouble believing these less charitable…
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Were you surprised that you were able to construct a model economy which generated fluctuations which closely resembled actual experience in the US?
19 Jan 2022 Leave a comment
Utopia, you are standing in it! 
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