Fred Foldvary wrote:
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.
Robin Hanson [EMAIL PROTECTED] replied:
But we are talking about a context where beliefs get translated into
actions in a
Fred Foldvary wrote:
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.
This whole idea is forty years out of date. Economists have been
[EMAIL PROTECTED] wrote:
In a message dated 11/10/02 8:41:23 PM, [EMAIL PROTECTED] writes:
There is a difference between ignorance and irrationality - that is the
central point of this literature
really.
Yes. Somewhere along the line someone--either the most ardents adherents or
Good link, Eric.
On the other hand, if you had just quoted this paragraph:
The concept of rational expectations asserts that outcomes do not differ
systematically (i.e., regularly or predictably) from what people expected
them to be. The concept is motivated by the same thinking that led Abraham
The best way to think about RE is that it is a consistency stricture
that says that the agents in your model of the economy should not be
less informed than you are. If you know the model then they should too
and the equilibrium defined accordingly.
Note that this perspective leaves it
Fred Foldvary wrote:
They have been theorizing and testing about cognition, but it is not clear
why it is labelled rationality.
Their usage is consistent with any dictionary.
... In fact, if you know you are vain then
rationally speaking you should adjust your beliefs in a more self-
In a message dated 11/11/02 10:42:47 AM, [EMAIL PROTECTED] writes:
--- [EMAIL PROTECTED] wrote:
Yes. Somewhere along the line someone--either the most ardents adherents
or the most disingenuous opponents--has defined rational expectations
as meaning that people are perfect prognosticators,
--- fabio guillermo rojas wrote:
how much of investing behavior is based on
self-assesment vs. rational expectations?
It seems like the difference between the return on
self-managed investments vs. the market, let's say,
should measure something meaningful like the value of
being an executive
I presume you mean irrationaly optimistic self-assesment? I'd say quite
a lot. But then comes the
hard question: what policy implications follow from this conclusion?
Yes, irrat self-assesment is a good word for it. Robin, I know you are a
fan of taxing people for not using their
A key free market principle is that investors better know how to spend
money than the gov't.
Fabio
That is not a free-market principle. The free-market principle is that a
person should have control over his property.
There is an economic principle that a large centralized government lacks
Fred Foldvary wrote:
--- Robin Hanson [EMAIL PROTECTED] wrote:
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
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