Release Date: Friday, September 26, 2003

2002 NOBEL PRIZE-WINNING ECONOMIST VERNON SMITH TO GIVE LECTURE October 1 AT UGA CHAPEL

ATHENS, Ga. — Nobel Prize-winning economist Vernon L. Smith will present a lecture titled "Energy Demand and Supply: Avoiding the Next Blackout" at 3:30 pm October 1 in the University of Georgia Chapel.

Smith, a professor of economics and law at George Mason University, was awarded the 2002 Nobel Memorial Prize in Economic Sciences along with Daniel Kahneman of Princeton University "for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms."

Smith is one of the pioneers in experimental economics. "We take propositions of economic theory and we test them with real people in controlled settings," said Smith in a 2002 Reason magazine interview. "Experimental economics helps put a human face on markets."

Experimental economics attempts to explain how a market performs based on the rules used to regulate participants and how the market's performance might change if the rules were changed. Experimental economics can also be used to model a new market and test its behavior in the laboratory before a huge sum of money is invested to establish a real-world version.

In addition to being a Nobel laureate, Smith's experiments in the 1990s modeling electrical power networks have made him a highly sought-after source by media seeking expert commentary on the massive power grid failure that struck New York and the northeastern United States in August and California's rolling blackouts in 2001.

Working in Australia in the 1990s, Smith designed experiments to simulate a market for wholesale electricity that allowed participants and policy makers to determine the most efficient and economical ways to buy and sell power on an electric power network. Australia ultimately began deregulation and privatization of its publicly owned electric power industry.

Smith conducted similar experiments on price-sensitive electric power markets in 1995 at the University of Arizona in which executives representing 25 of the nation's largest power companies participated, including Florida Power, Duke, Ohio Edison, Mohawk, Pacific Gas and Electric and Southern California Edison.

Smith received his bachelor's degree in electrical engineering from the California Institute of Technology and his doctorate from Harvard. He is a research scholar in the Interdisciplinary Center for Economic Science and a fellow of the Mercatus Center, both located in Arlington, Va. He has authored or co-authored more than 200 articles and books on capital theory, finance, natural resource economics and experimental economics.

He is a distinguished fellow of the American Economic Association, an Andersen Consulting Professor of the Year and the recipient of the 1995 Adam Smith Award from the Association for Private Enterprise Education. He was elected a member of the National Academy of Science in 1995 and received Caltech's distinguished alumni award in 1996.

Smith's lecture is sponsored by the Department of Economics' Ramsey Center for Private Enterprise in UGA's Terry College of Business.

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