The Review of Austrian Economics, 18:2, 135–144, 2005.
2005 Springer Science + Business Media, Inc. Manufactured in The Netherlands.
Hayek and Experimental Economics
VERNON L. SMITH email@example.com
Interdisciplinary Center for Economic Science, 4400 University Drive, MSN 1B2, Fairfax, VA 22030, USA
Abstract. This paper is an address given to the Austrian legislature in Vienna, Austria on March 3, 2004. The main
focus is on the connection between insights from F.A. Hayek’s research program and experimental economics.
KeyWords: Austrian economics, F.A. Hayek
JEL classiﬁcation: B25
Thank you very much for your warm and embracing welcome. It is a special pleasure and
honour to speak in this historic room where the great Austrian economist, B¨ohm-Bawerk
and later Schumpeter each served the Austrian people in the capacity of Minister of Finance.
I feel an immense sense of this history as I address you today.
One of the pleasures and challenges of receiving a Nobel Prize is that it gives you
the opportunity to meet presidents and to speak to legislators. I never had this humbling
opportunity before. The announcement that Nobel was recognizing my work came on
October 9th in 2002, and one of the ﬁrst major events for me after that was the invitation
from President Bush for me and all the other American Nobel Laureates to come to the White
House for a social, and of course a photo, opportunity to meet the President. President Jimmy
Carter, the former President, had won the Nobel Peace Prize, so this was an opportunity
for me to meet two presidents. When I met President Jimmy Carter I told him he was my
favourite democratic president. In phrasing it that way, I didn’t have to declare that I have no
party favourites, and he said, “Why is that? And I replied, “It was your administration that
really sparked the deregulation movement in the United States.” I also said that “although
President Reagan had been a supporter of the deregulation movement, many people had
not realized that the deregulation of the airlines, the railroads, trucking and the natural gas
industry in the US had been initiated under Jimmy Carter. And he was extremely proud of
that and said “I’m glad you can appreciate it. Deregulation was one of the important things
my administration did. We were proud of that accomplishment.”
Each of the Laureates had about three or four minutes with President Bush to interact
privately before we went into the Oval Room for pictures, and after that the Lincoln Room
for a social gathering with friends and families. I had, of course, never been in the White
House before. This was in November 2002 just after the mid-term elections in the United
States. President Bush congratulated me for the Nobel Prize and I thanked him and I said, “I
should congratulate you. Your win was bigger than mine.” He agreed, and smiled proudly
of the victories he had just won in the midterm elections. Then I said, “You must have been
doing something right,” adding, “but you did two things wrong: one was the farm bill and