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http://nobelprize.virtual.museum/nobel_prizes/economics/laureates/2002/smith-lecture.pdf
But when a design is modified in the light of test results, the modifications
tested, modified again, retested, and so on, one is using the laboratory to effect an evolutionary adaptation as in the ecological
concept of a rational order. If the final result is implemented in the field, it certainly undergoes further evolutionary
change in the light of practice, and of operational forces not tested in the experiments because they were unknown, or beyond
current laboratory technology. In fact this evolutionary process is essential if institutions, as dynamic social tools,
are to be adaptive and responsive to changing conditions. How can such flexibility be made part of their design? We do not
know because no one can foresee what changes will be needed.
But most of our operating knowledge, and ability to decide and perform is
non-deliberative. Our brains conserve attentional, conceptual and symbolic thought resources because they are scarce, and
proceeds to delegate most decision-making to autonomic processes (including the emotions) that do not require conscious attention.
Emergent arrangements, even if initially constructivist, must have survival properties that incorporate opportunity costs
and environmental challenges invisible to constructivist modeling. This leads to an alternative, ecological concept, of rationality:
an emergent order based on trial-and-error cultural and biological evolutionary processes. It yields home- and socially grown
rules of action, traditions and moral principles that underlie property rights in impersonal exchange, and social cohesion
in personal exchange. To study ecological rationality we use rational reconstruction – for example, reciprocity or other
regarding preferences – to examine individual behavior, emergent order in human culture and institutions, and their
persistence, diversity and development over time. Experiments enable us to test propositions derived from these rational reconstructions.
Doing experimental economics has changed the way I think about
economics. There are many reasons for this, but one of the most prominent
is that designing and conducting experiments forces you to think through
the process rules and procedures of an institution. Few, like Einstein, can
perform detailed and imaginative mental experiments. Most of us need the challenge of real experiments
to discipline our thinking. In this paper I hope to indicate how my thinking has been
changed in some detail.
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