2002 Nobel Prize in Economic Sciences

The 2002 Nobel Prize in Economic Sciences has been awarded to Daniel Kahneman and Vernon L. Smith. The prize was announced by the Royal Swedish Academy of Sciences in Stockholm on 9 October 2002.

The citation

Half of the prize goes to Daniel Kahneman "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty". Half of the prize goes to Vernon L. Smith "for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms".

The laureates

Daniel Kahneman was born in 1934 in Tel Aviv, British Mandate of Palestine (now Israel), and is affiliated with Princeton University, Princeton. Vernon L. Smith was born in 1927 in Wichita, the United States, and is affiliated with George Mason University, Fairfax.

Why it matters

Kahneman, a psychologist, showed how people make decisions that depart from the rational models of traditional economics. Smith pioneered the use of laboratory experiments to test economic theories.

The prize

The prize is worth 10 million Swedish kronor, divided between the laureates. It will be presented at a ceremony in Stockholm on 10 December, the anniversary of the death of Alfred Nobel, the Swedish inventor of dynamite whose will founded the prizes in 1895. Strictly, this award is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It was established by the Swedish central bank in 1968, but is presented alongside the Nobel Prizes.