A short musing on the economy
How much of the stability of our various economies relies on the relative rationality of the actors involved? I mean, it’s a common criticism leveled against economics that models fail to take into account ways in which humans are not rational actors. But this is a different point entirely. How much of the actual instability which we observe in economic systems is due to the stupidity of people? Could the housing bubble and current crisis have occurred in a world where people were more rational? Is trying to create economic stability hopeless with such irrationality to deal with?
