What are some good examples of irrational behavior?
Irrational behavior is not limited to women or men. When failure is anticipated, expected, when tragedy is inevitable, when tensions are mounting, when our plans gone to astray, when our expectations are not yielding any thing, we tend to lose our rational thinking. In most cases if we take our own decision, we will not be irrational - but when we start consulting some one else on our personal matters - we face conflicts between our own opinion and friend's opinion on our matters and we may not be in a position to decide what is correct and can not take decision and we act irrationally and later blame the friend. Women are always worried about their positions, identities and while men are open and pro active. Women tend to look at each word spoken by men with x ray eyes while men take women's word as it is. You will find many examples in this kind of social media where women gets suspicious and vary about men with whom they maintain conversation and become irrational or act as if irrational to verify the reaction of the men or his attitude or capability of handling the situation. Men act irrationally with other men - not with women.
What is behavioral economics?
Is it like Freakonimics or Blink and Tipping Point stuff? I read an article in the NYT today about Obama's economics and he said, "The project of our new President is figuring out how do you create bottom-up economic growth, as opposed to trickle-down economic growth . . ." This is so counter-intuitive for me. I don't get it. I always thought that investment grew the economy. The only way to grow it from the bottom up would seem to require having a huge black market and then, of course, there are problems with that idea. What am I missing? Thanks.
What role does rational self-interest play in economic analysis?
rational self interest means that consumers are interested in making themselves more better off than worse. However, this is not always true. Cigarettes and alcohol are 2 examples of products that can lead to more problems than benefit, especially if taken in large quantities. Therefore, assuming that people are rational is not always a fair assumption, and many economic theory can go out the window. thats it, easy rite
What are the assumptions of rationality in economics?
The assumption of Rationality means that we assume that a person is rational in nature. A rational person will always take decisions that result in optimization and provide them with the greatest benefit.A rational consumer will always aim to maximize his satisfaction.A rational proucer will always aim to maximize his profit.
What are rational expectations?
Rational Expectations (RE) is a theory started by economist Muth (?) and then developed by economist Robert Lucas. It is widely used in finance, since it is the cornerstone of the efficient markets theory. Under RE, individuals are supposed to be totally rational, getting as much information as posible to make decisions. This information is used to make the best decision possible, thus everyone is looking for the best for themselves, getting to an efficient market. RE deviate from previous theories, where the prices or future value of an asset or variable was determined by observing its past occurances and behaviour. In RE, individuals do look at the past, but also the present. Fiscal and monetary policiy, wars, trade, technology, scandals are taken into consideration to predict furute values. The future value of an asset is then set by the predictions of individuals. Individuals take into account what the goverment is doing, and absorve that info to predict what will happen. The model includes an error for mistakes made by individuals, but that error avrages 0 since everyone is acting for its own good. This is the reigning theory in microeconomics and finance. I would critices 2 things. One is that information is expensive, so not everyone has the same information. The theory does state, howerver, that if someone owns more information, he could use it to make a profit, say, buying a stock, until everyone else start acting and then the fair price is set. But the other thing i think here, is that, lets face it, not all individuals are rational.