Rationality in Economics: Constructivist and Ecological Forms

by Vernon L. Smith

The principal findings of experimental economics are that impersonal exchange in markets converges in repeated interaction to the equilibrium states implied by economic theory, under information conditions far weaker than specified in the theory. In personal, social, and economic exchange, as studied in two-person games, cooperation exceeds the prediction of traditional game theory. This book relates these two findings to field studies and applications and integrates them with the main themes of the Scottish Enlightenment and with the thoughts of F. A. Hayek.

Genres: Economics, Philosophy, Nonfiction

386 pages, Paperback

First published October 31, 2007

Reviews

[Homo Ludens · Rating 5 out of 5]

As a huge fan of F.A. Hayek, I was very happy to see some of his deepest ideas pursued by a great scholar.

[Radovan Kavický · Rating 5 out of 5]

Until reading Rationality in Economics, I had not read an economics book that gave me precisely what I want: (1) genuine insights on a wide range of important issues, (2) a feel for the key contributions in the academic literature with a minimum of technical detail, and (3) a writing style that explains so much in straightforward language that reading the book becomes a uniquely enjoyable learning experience.

Vernon Smith embraces Hayek's model of human psychology in The Sensory Order (1952), which is indeed a brilliant work adumbrating modern connectionism. What is often overlooked is that Hayek's aim was to develop a completely decentralized model of human psychology for the same reasons he preferred a completely decentralized model of the ecological economy. In this, Hayek was really closer to the old associationists of the classical liberal period.

There is no difference, for instance, in the brain of a monkey and a human from the Hayekian/Hebbian point of view, except quantitative.

[Bill Easterly · Rating 4 out of 5]

The best Hayekian book in a while -- unfortunately the writing is so turgid (starting with the title!) that it is unlikely to find a very wide audience.

[Sher Afghan · Rating 1 out of 5]

Very difficult to read. Filled with jargon and references.