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Professors Vernon Smith and Peter Bossaerts visit the School

We were delighted to have Professor Vernon Smith, winner of the Nobel Prize 2002 for his work on experimental economics, and Professor Peter Bossaerts, Neuroeconomics pioneer, visit the School recently.

Vernon gave a public lecture on his new research on Humanomics at a joint symposium with Peter. In his most recent work, he explores economic decisions in markets through the lens of Scottish Enlightenment, focussing on the role of human moral development as a driver of behaviour. The symposium attracted a large number of students and faculty from across the University.

Vernon Smith, Chapman University, said: “For me, the Durham Conference was an opportunity to present, for the first time, classical economics from the perspective of experiments, including both market experiments and the two-person trust and ultimatum games.

The choice results in the games appear to contradict those in the markets. I propose that Adam Smith's The Theory of Moral Sentiments offers a resolution, as here is a non-utilitarian theory that involves no contradiction between other-regarding conduct in communities of social exchange, and action in the self-interest in broader communities of economic exchange. Neighbourliness in our social conduct does not require ‘social preferences’. In social exchange, the rules we learn to follow build on common knowledge that all are self-interested, and therefore which actions are hurtful or beneficial to whom in social intercourse.

If that resolution is to be viable, however, others must be able to replicate many of the test experiments that have been studied, further interpret and examine Smith's way of thinking, and design new tests of the propositions he derives.”

We held the event with our Experimental Methods in Business Research Group (EMBR) and the University’s Institute of Hazard, Risk and Resilience (IHRR), following an invitation by Professor Jason Shachat and Professor Julian Williams. The visit emphasises and expands Durham's global presence as a centre of excellence in research.

Peter Bossaerts, The University of Melbourne, said: “One striking aspect about the symposium was the diversity of fields represented in the audience. Everyone had heard about the struggles to re-vitalise the discipline of economics, and so the audience appeared eager to hear about the most promising way forward. How a combination of old, overlooked ideas from the old masters (Adam Smith; Friedrich Hayek), together with modern developments in the theory of computation, can lead to resolution of some of the most tenacious paradoxes of economics, such as the emergence of trust, and of effort to discover, in the absence of the economic incentives that the ‘extant theory’ has been claiming are needed. Interactions before, during and after the symposium were therefore lively and informative. My thanks go to the organisers for allowing Vernon Smith and myself to explain where we think economics is going, and how to enhance its scientific value.”

Vernon also participated in a workshop on the impact of algorithmic traders in financial markets held at Ushaw College the same week. The workshop, which was hosted in the context of an ESRC-funded grant held by the EMBR and IHRR, brought together distinguished experts from all over the world and junior faculty of the University to present their most recent findings and discuss newly emerging issues in the field.

For more information on the Experimental Methods in Business Research Group (EMBR), please click here.

For more information about the Institute of Hazard, Risk and Resilience (IHRR), please click here.