With National Science Foundation support Dr. Vernon Smith will purchase 20 90 mHz Pentium `IBM type compatible` micro computers, 27 16 MB RAM upgrades for existing machines and a portable high resolution projection system to upgrade and expand the University of Arizona Economic Science Laboratory. Dr Smith is a leader in experimental economics and he and his collaborators have worked to develop experimental situations in which human subjects make choices which have real potential economic rewards. Computerization has made it feasible to design various real time market institutions, to study their performance in the laboratory and thus gain insight into how markets function and how humans respond. Beginning about a decade ago laboratory experiments started to explore the performance of `smart` computer assisted markets. In these experimental markets the messages (bids) of decentralized agents are processed using various optimization algorithms applied to batches of bids or to bids arriving in real time. This has greatly expanded the demands on hardware capacity and software sophistication. As these experimental markets have become technologically more complex, and demanding of system design and support, they have also become more demanding on the ability of human subjects to articulate rational message responded based on judgment and calculation. Consequently the next generation of experimental markets will require `expert system` computer support at each station for the decision maker(s) at that station. The computers provided in this award will make such an advance possible. In addition to increasing understanding of principles which underlie human economic behavior, experimental economics serves a number of practical functions. It helps regulators and government officials to design systems to allocate scarce resources such as radio wave space or airline gates and to design effective bidding processes. At Arizona the programs developed will also be incorporated into the teaching of economics on both a local and worldwide basis.
