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irrational

A collection of 3 posts
Behavioural economics: a primer
Behavioral economics

Behavioural economics: a primer

It has frequently been observed that people often reach different conclusions from the same set of information, based on how it is presented; this is referred to as the “framing effect.” Tversky and Kahneman (1981) showed how framing can affect the choice made between two life-saving programs. One group of
Mar 16, 2015 4 min read
Gold Class Animal Spirits
animal spirits

Gold Class Animal Spirits

In his 1936 book ‘The General Theory of Employment Interest and Money’ John Maynard Keynes outlined how rather than being independently rational, investors were often prone to erratic herd-like behaviour. He argued that macroeconomic stability is inherently vulnerable to the ‘animal spirits’ of speculators. The recent deflation of the post
Apr 21, 2013 3 min read
Irrational Strategies: Dealing with an Altruistic Prisoner
homo economicus

Irrational Strategies: Dealing with an Altruistic Prisoner

So you are presented with the following prisoner’s dilemma game. What is your choice? Most economics freshmen will have learnt that when presented with the choices of cooperation or finking, finking is the dominant strategy, and an all-fink nightmare is the only pure strategy Nash equilibrium. Against homo economicus,
Oct 24, 2012 3 min read
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