Feb. 21, 2020: Vernon Smith presents 'Classical Economics Lost and Found: The Role of Experiments'

The College of Business and Public Policy Department of Economics invites you to:

Classical Economics Lost and Found: The Role of Experiments

A faculty and student seminar

Friday, Feb. 21, 3:30–5 p.m.
Rasmuson Hall, Room 117

Presented by Vernon L. Smith — George L. Argyros Endowed Chair in Finance and Economics, Chapman University; UAA Rasmuson Chair of Economics; and 2002 Nobel Memorial Prize in Economics

Abstract

Neoclassical elementary consumer demand theory is about individuals choosing utility maximizing continuously variable quantities of goods given prices and “fixed” income. Jevons required complete information for determining prices, and Walras imagined an auctioneer finding prices. Neither could model market price discovery and punted.

This neoclassical paradigm reversed the problem addressed in Classical Economics (Adam Smith through several French & English followers) wherein consumer quantities were discrete and given; each individual had a maximum willingness to pay (or accept) value for a unit and the collective of buyers and sellers found prices in a market interactive process. Each bought (sold) if and only if price was not more (less) than value and find equilibrium by always comparing value with prices that emerge.

The first market experiments were surprising to all, unintentionally establishing that naïve sellers could easily find the prices and quantities that cleared a market. Classicalism was on to something that got lost.

Moreover, for classicalism, fixed income is weird. If income is fixed, how do you study “the nature and causes of the wealth of nations?” Wealth was the classicalists’ constraint. I will talk about these issues and develop some classical theory.

Snacks and refreshments will be provided following the seminar along with the opportunity to mingle and chat with Dr. Smith.

February Archive