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View Diary: Morning Feature: Animal Spirits, Part I - Irrational Economic Actors (72 comments)

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  •  That's essentially their thesis. (5+ / 0-)

    As I've noted in other comments, Akerlof and Shiller argue that in order to be useful, economics most predict how people will behave, rather than how they would behave if they were Rational Economic Actors in a theoretical Efficient Market.  That means taking account of the factors you mention, which they classify in terms of animal spirits.  A theory that describes how drivers would act on an empty, perfectly flat and dry road when they have ample time to reach their destinations ... is not very useful for in predicting how drivers will act in traffic, on a hill, in the rain, when they're late for work.

    Good morning! ::huggggggggggs::

    •  Fairness? (6+ / 0-)

      How does one predict the parents who financially cut their children off at the age 18, as opposed to those families who use their financial means to advance their children's careers?  The economics of the question is the difference between I made it on my own, so should you, and I had a lot of help when I was young so I'll help you.  It boils down to do we value money for moneys sake or do we value money for what we can do with it, which is part of the 'fairness' complexity.

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