Chapman University - Economic Science Institute

ESI

Economic Science Institute

In January 1956, Professor Vernon L. Smith conducted his first experiment with an introductory economics class because he believed there had to be a better way to teach economics. That experiment led him to develop a new way to teach and research economics, and it became the contribution for which the Chapman University professor was awarded a share of the 2002 Nobel Prize in Economic Science. In 2008, Prof. Smith and his colleagues Profs. John Dickhaut, David Porter, Stephen Rassenti, and Bart Wilson founded the Economic Science Institute (ESI) at Chapman.

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Financial Times

Housing, Depressions and Credit Collapses

Featured in the Financial Times, Jan. 24, 2010, written by Steven Gjerstad and Vernon L. Smith

Financial and economic collapses in 2007-2008 and 1929-1930 followed unprecedented residential mortgage credit expansions. Both generated household balance sheet crises that were transmitted to banks as asset prices collapsed against fixed debts. Industry suffered from declining expenditures on housing and durable goods, and income fell when production and employment declined. Irving Fisher (1933) described this spiral in “The debt-deflation theory of great depressions.”

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The Economic Science Institute Team at Chapman University. Back row: Bart J. Wilson, Stephen Rassenti, David Porter, Front row: Vernon L. Smith and John Dickhaut.