Fred Foldvary wrote:
--- Robin Hanson <[EMAIL PROTECTED]> wrote:But we are talking about a context where beliefs get translated into actions in a pretty straightforward way.
irrationaly optimistic self-assesment?It is true that many investors are overconfident of their abilities and
wrongly think they can beat the averages.
But why call this "irrational"?
It seems to me that the concept of rationality makes sense when it is
applied to human action, but it is not meaningful when applied to beliefs. Action is rational or not, based on the actor's knowledge.
People buy and sell stuff when they believe doing so will raise their expected (risk-corrected) return of
their portfolio.
... If false beliefs areThere is a difference between ignorance and irrationality - that is the central point of this literature
irrational, then almost everything we do is irrational, and there is no
economics. For example, most folks don't have a correct knowledge of
nutrition; their food choices are thus based on ignorance.
really.
