A Life of Experimental Economics, Volume II (eBook)

Vernon L. Smith was awarded the Nobel Prize in Economic Sciences in 2002 for his groundbreaking work in experimental economics. Dr. Smith has joint appointments with the Argyros School of Business & Economics and the Fowler School of Law at Chapman University, and he is part of a team that will create and run the new Smith Institute for Political Economy and Philosophy at Chapman. Dr. Smith has authored or co-authored more than 300 articles and books on capital theory, finance, natural resource economics and experimental economics. He serves or has served on the board of editors of the American Economic Review, Cato Journal, Journal of Economic Behavior and Organization, the Journal of Risk and Uncertainty, Science, Economic Theory, Economic Design, Games and Economic Behavior, and the Journal of Economic Methodology. He is past president of the Public Choice Society, the Economic Science Association, the Western Economic Association and the Association for Private Enterprise Education.

Preface 6
Acknowledgements 8
Praise for A Life of Experimental Economics, Volume II 10
Contents 15
List of Figures 17
Part III East, Southwest, East Again 19
13 Yankee Land 20
14 West with the Night 34
15 Arizona and E-Commerce in the Laboratory 62
Some Early Intellectual History 65
16 My Friends Were Finally Right 103
17 Wives, Daughters, and Sons 132
Part IV Rethinking Recessions, Markets, Adam Smith and Religion 158
18 Home Again: Chapman University 159
19 Economic Collapse 2007–2008: Would 1929 Be Reborn in Anemic Growth? 165
Proposition 1: Severe Economic Recessions Have Their Origin in Household and Bank Balance Sheet Crises 167
Proposition 2: Standard Economic Models Do Not Contain Balance Sheets 168
Proposition 3: The Great Recession—A Balance Sheet Crisis 169
Proposition 4: The Depression—A Balance Sheet Crisis? 171
Proposition 5: Policy Experts, Economists, Consumers, and Businesses Were Blindsided by the Great Recession 172
Proposition 6: Bernanke’s 14 Months of “Liquidity Enhancement”—A Test of the Friedman-Schwartz Hypothesis that Liquidity Expansion Can Prevent Depression-Like Episodes? 175
Proposition 7: Monetary Policy Is Ineffective in a Balance Sheet Crisis 177
Proposition 8: When Monetary Policy Is an Ineffective Economic Stimulant, So Is Government Deficit Spending, and for the Same Reason 177
Proposition 9: Housing Expenditures Are a Leading Indicator of Most Economic Recessions in Only the Depression and Great Recession Was the End of the Recession Not Accompanied by a Housing Recovery
Proposition 10: Stock Market Crashes Do Not Impact Household and Bank Balance Sheets the Way Housing-Mortgage Market Crashes Do Consequently, Loss in Stock Market Value Is Not a Good Indicator of Potential Damage to the Economy from Losses in Housing Val
Proposition 11: Bankruptcy Facilitates Recovery from Negative Equity Balance Sheet Recessions Artificial Avoidance of Bankruptcy Delays Recovery: The Primary Mechanism of Recovery Involves the Repair and Rebooting of Damaged Balance Sheets from New Sourc
Proposition 12: Rules That Focus on Incentive Compatibility Alone Carry the Realistic Hope That Stability Can Replace the Historical Instability That Has Been the Hallmark of Housing-Mortgage Markets 186
In Summary 188
20 Markets: The Good, the Volatile and the Sometimes Ugly 192
21 Reconnecting Modern Economics with Its Classical Origins: Discovering Adam Smith 201
22 Faith and the Compatibility of Science and Religion 228
Author Index 246
Subject Index 251