The energy behind Vernon Smith’s experimental economics Kyu Sang Lee and Philip Mirowski* This paper begins with the interplay of the induced value theory and the Hayek hypothesis, and subsequently suggests that we need to understand Vernon Smith’s experimental method as not simply empirical, but encompassing a commitment to a special version of neoclassical demand theory. To this end, we compare his commitment to Harold Hotelling’s important work on demand, an exemplar of what we dub the Mirowski–Hands thesis. By providing an overview of Smith’s research up until the mid-1970s, we place this progenitor of experimental economics in a new light, revealing his special epistemic commitments. Key words: Vernon Smith, Hayek hypothesis, Induced value theory, Mirowski– Hands thesis, Energy metaphor JEL classifications: B21, B31, C90, C92 1. Introduction The purpose of the present paper is twofold. First, it offers a historical account of the genesis of the early practice of a pioneer of experimental economics, Vernon Smith. Second, it provides a test for an empirical claim in the history of economics, the Mirowski– Hands thesis (Hands, 1992, 1993; Hands and Mirowski, 1998; Mirowski, 1984, 1989), which can be summarised as follows: at certain crucial junctures in the history of neoclassical economics, the energy metaphor functioned as an influential heuristic, so much so that on many (albeit not all) occasions, ‘[if] we view through the filter of the energy metaphor we can ‘‘see’’ what has gone on in neoclassical economics much more clearly’ (Hands, 1992, p. 100). The main conclusion to be drawn here is that once due attention is Manuscript received 1 March 2006; final version received 21 May 2007. Address for correspondence: Kyu Sang Lee, College of Social Sciences, Ajou University, San 5, Wonchun- dong, Yeongtong-gu, Suwon-si, Gyeonggi-do, Korea; email: kyuslee@ajou.ac.kr * Ajou University, Korea and University of Notre Dame, USA, respectively. The present paper is based on chapter 1 of the PhD thesis by the first author; a previous version of this paper was entitled ‘The purest form of rationality is the one imposed from without: Vernon Smith, experimentation, integrability and the induced value theory’. During the final stages of the composition of the present paper, the first author’s research was supported by the New Faculty Grant provided by Ajou University in 2007. We are grateful to Professor Vernon Smith for allowing access to his unpublished materials deposited at Duke University and also for permission to quote from the unpublished materials. He graciously provided us with his unpublished biographical note, and we have benefited from his comments. Thanks also go to audiences at the History of Economics Society Conference (2003, Duke University), the European Conference on the History of Economics (2004, University of Reims), the Summer Institute for the Preservation of the Study of the History of Economics (2004, George Mason University), and the 4S-EASST Conference (2004, E ´ cole des Mines de Paris)— especially, Philippe Fontaine, Wade Hands, Albert Jolink, Robert Leonard, David Levy, Sandra Peart, Eric Schliesser and Esther-Mirjam Sent. Comments by two anonymous referees and the editorial help of Edward Nik-Khah and Thomas Scheiding are gratefully acknowledged. The usual caveats apply. Cambridge Journal of Economics 2008, 32, 257–271 doi:10.1093/cje/bem036 Advance Access publication 30 October, 2007 Ó The Author 2007. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.