STOCKHOLM, Sweden - Two Americans won the Nobel prize for economics today for pioneering the use of psychological and experimental economics in decision-making. It was the third year in a row that Americans have taken the prize.

Daniel Kahneman, 68, a U.S. and Israeli citizen based at Princeton University in New Jersey and Vernon L. Smith, 75, of George Mason University in Fairfax, Va., will share the $1 million prize. Of the 51 people who have received the prize, 34 have been from the United States.

Smith is a native of Wichita (graduate of North High)  and earned a master's degree in economics from the University of Kansas in 1952.

Kahneman has integrated insights from psychology into economics, "especially concerning human judgment and decision-making under uncertainty," the Royal Swedish Academy of Sciences said in its citation.

His experiments in probability theory showed a shortsightedness in interpreting data that could explain large fluctuations on financial markets and other phenomena that elude existing models, the academy said.

The award is the fifth Nobel economics prize for a Princeton faculty member.

Smith laid the foundation for the field of experimental economics, demonstrating the importance of alternative institutions.

Smith's theories have proven that markets don't necessarily have to have a large number of buyers and sellers to operate efficiently.

The academy singled out his use of "wind-tunnel tests," where trials of new, alternative market designs are done in the laboratory before being implemented. That could be useful, for example, in deciding whether to deregulate electric companies or privatize public monopolies, the citation said.

Smith "established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms," according to the academy.