Vernon Smith and Steven Gjerstad (Smith a professor at Chapman University and the latter visiting) analyze U.S. housing bubbles and what they wrought in a Wall Street Journal opinion piece. Economist Smith won his Nobel prize for work in behavioral economics. When he started out, economists were able to reproduce bubbles in laboratories. Bubbles seemed so transparent that the economists thought they would never occur in "the real world."
So much for economists being Pollyannas!
Tuesday, April 07, 2009
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