Behavioral Economics

Extremely interesting article, I agree that individual action does not remotely resemble economic modeling. However, I would be cautious to assume that humans are irrational, for ‘rationality’ is a subjective designation based on knowledge. Ancient tribes in Africa refused to have pictures taken because they became convinced that anything that could capture their image was in fact stealing part of their soul. While this may seem irrational for someone in the Western culture, it is in fact, a byproduct of the ignorance on the mechanics of how photography works. Economists have a superior understanding of the mechanics of supply and demand, thus, producing a biased expectation on ‘rational’ behavior. What is even more interesting about this paradox, is that any simpler assumption on individual behavior would seem ‘irrational’ to any economist because of their level of knowledge.

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