Rational Financial Behavior
We all like to think that we’re rational human beings. That our decisions are based on facts and logic. After all, that’s what intelligent people do. At least that’s what we think they do.
It turns out that there’s a pretty healthy controversy about that. For years, economists at the Univ. of Chicago have promoted the view that people consider all the relevant facts and then make decisions based on what serves them best. They’ve even reduced many decisions to mathematical formulas.
Other economists say that humans can’t possibly include all the relevant information in their decisions. There’s just too much data for any person to rationally evaluate.
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