Thursday, December 4, 2008

The Rationality of Less-than-rational

I've been bugged for years by over confident people around me asserting their absolute rationality. I guess that is the undeserved fate of working in the world of nerds. The most annoying example of this over-confidence was the existence of those how argued for "efficient markets" and who held high the torch of "homo economicus". I would try to poke holes, but unfortunately, if you know that you are supremely rational, you don't have time for arguments or examples. Truth spreads its own light in front of you and you march triumphantly forward, much as the financial industry did from in the first decade of the 21st century.

Here's Dan Ariely, a behavioural economist, pointing out the oddities of a belief in "homo economicus"...

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