Why Most Things Fail

Chapter 6 / A game of chess

Experiment economics by Dan Kahneman and Vernon Smith radically defies modern economics and rational agent beliefs.

The 2002 Nobel Prize winners for economics, Vernon Smith and Daniel Kahneman, have both worked extensively on situations where agents either do not or cannot maximize. Rather than rely on a priori theorizing about how rational individuals ought to behave, they have carried out extensive empirical tests about how people really do behave. In so doing, they have created an entirely new field known as experimental economics. In the same way that computers have reversed previous beliefs about the outcome of chess games with certain combinations of pieces, experimental economics has altered, sometimes quite dramatically, our view of how humans actually behave.</bloclquote>