Each individual family, then, does almost as well with a good rule of thumb as it would with perfect rationality—close enough to make perfect rationality an irrational goal. But now comes Akerlof’s big insight: “near-rational” behavior and perfectly rational behavior have very different implications for policy.

By :

Publish in :

Category

Tags

Author

Literature

Film

TV Show

Each individual family, then, does almost as well with a good rule of thumb as it would with perfect rationality—close enough to make perfect rationality an irrational goal. But now comes Akerlof’s big insight: “near-rational” behavior and perfectly rational behavior have very different implications for policy.

Paul Krugman, Peddling Prosperity (1994), Ch. 8 : In the Long Run Keynes is Still Alive