Akerlof and Schiller on the limits of markets(washingtonpost.com)
washingtonpost.com
Akerlof and Schiller on the limits of markets
https://www.washingtonpost.com/news/wonkblog/wp/2015/10/29/this-kardashian-headline-shows-why-two-nobel-winners-say-the-economy-is-broken/?tid=sm_fb
5 comments
Good HN discussion of a review of the book: https://news.ycombinator.com/item?id=10330280
"I did a Google N-grams search [how often a word appears in books] for wantability. The term enjoyed some popularity in the 1920s and 1930s, then exponentially decayed. After the Reagan-Thatcher revolution the term was gone."
Sorry to steer off topic, but how much can we trust google N-gram researches? Are they accepted in scientific papers? Just a curiosity of mine.
Sorry to steer off topic, but how much can we trust google N-gram researches? Are they accepted in scientific papers? Just a curiosity of mine.
Here you have a discussion:
http://meta.english.stackexchange.com/questions/2469/should-...
http://meta.english.stackexchange.com/questions/2469/should-...
The way they introduce the positions of Akerlof and Schiller seems to indicate that markets are not irrational, but insufficiently informed.
We are not rational agents but agents of bounded, imperfect rationality. Even if all the information is out there, our bounded natures invite the ideas in this article.
Has nothing to do with information. The argument in the book is about markets exploiting kinks in human nature and reasoning to sell things that in the long term are not beneficial for anyone but driven by short-term thinking people buy the stuff anyway. Even if you were sufficiently informed a lot of research in psychology and behavioral economics shows that you still wouldn't make the "rational" decision.
Shiller, not Schiller.