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Nobel Winner Smith's Research Cited in Singapore's Business Times

A Singapore news writer cited research by Nobel Prize winning economist and professor Vernon Smith in analyzing bubble and correction effects in Singapore's market, concluding that necessary investor learning will take place faster today than ever before and that today's market is generally more knowledgeable than in the past.

Sanguine about the market, Business Times (Singapore), April 7, 2007. By Teh Hooi Ling.

Excerpt:
"This week, while rummaging through stacks of notebooks in search of an interview I did earlier this year, I cam across notes made some two years back on a talk by, and my interview with, Vernon L Smith - Nobel Prize winner and the 'father of experimental economics.'

"His findings and conclusions about market participants' behaviour in the stock market bears repeating. That's because at different times of our lives, at different cycles in the stock market, we gain new insights from reading such timeless wisdom.

"Prof Smith, who teaches economics and law at George Mason University in the US, was awarded a Nobel Prize in economics in 2002 for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms.'

"Before that, economics was widely regarded as a non-experimental science. As Paul Samuelson, author of the classic textbook Economics, wrote: 'Because of the complexity of human and social behaviour, we cannot hope to attain the precision of the physical sciences. We cannot perform the controlled experiments of chemists or biologists. Like the astronomer, we must be content largely to observe.'

"Prof Smith changed all that. He conducted experiments in the controlled environment of the laboratory to test economic theories, in particular why markets work the way they do. He shared that year's Economics Prize with Daniel Kahneman, a professor of psychology and public affairs at Princeton University, whose separate research into human decision-making helped develop the field of behavioural finance."