US experts share economics award

US: Americans Prof Daniel Kahneman and Prof Vernon Smith shared the 2002 Nobel economics prize yesterday for work on how psychology…

US: Americans Prof Daniel Kahneman and Prof Vernon Smith shared the 2002 Nobel economics prize yesterday for work on how psychology affects people's buying decisions and for developing laboratory experiments in economics.

The Royal Swedish Academy of Sciences said Prof Kahneman (68) and Prof Smith (75) will share the $1 million prize for groundbreaking studies beyond the traditional assumption of rational human economic behaviour driven by self interest. Prof Smith, born in Wichita, Kansas, is a professor of economics and law at George Mason University, Virginia.

"He has developed an array of experimental methods, setting standards for what constitutes a reliable laboratory experiment," the academy said. He spearheaded "wind-tunnel tests" where trials of new market designs, such as a deregulated electricity market, are carried out in a lab before being implemented in practice.

Prof Kahneman, born in Tel Aviv, is a professor of public affairs at Princeton University and the first Israeli to win the Nobel economics prize. "Kahneman has integrated insights from psychology into economics, thereby laying the foundation for a new field of research," the academy said. He discovered how human judgment may take shortcuts that depart from basic principles of probability. - (Reuters)