Tag: Theory

Rational expectations fail for the same reason communism failed – the arrogance and ignorance of the monopolist.

On October 14th at Merton College, Oxford, Professor Robert Frank gave a talk exploring the potentially illuminating role of Darwin in economic theory. John was asked...

The reputation of economics and economists, never high, has been a victim of the crash of 2008. The Queen was hardly alone in asking why no one had predicted it. An even more serious criticism is that the economic policy debate that followed seems only to replay the similar debate after 1929. The issue is budgetary austerity versus fiscal stimulus, and the positions of the protagonists are entirely predictable from their previous political allegiances.

Few voters were ever much interested in the old rhetoric of socialism, and they have equally little interest in the new rhetoric of rights.

A few failed components may bring about collapse in a complex interdependent system. As in the Gulf of Mexico spill, or at the Fukushima disaster, or in the credit market in 2008.

After mistaken claims made ahead of the global crisis won much academic support, long-held assumptions were called into question – but the real world often remains overlooked or ignored.

Rousseau was an early and incisive critic of the idea that self-interested behaviour would necessarily work to the benefit of all. If the hunt were to catch a deer, it would need to establish shared values, and probably impose them through some sort of hierarchy. Without such a structure, there would be no more for supper than the occasional hare.

Consistency is the defining principle of rational choice theory. John looks instead to Ralph Waldo Emerson 'a foolish consistency is the hobgoblin of little minds'.

James Harkin, who describes himself as a social forecaster, is a frequent contributor to the Financial Times. So, as you would expect, he writes...

What is important in billiards is the result, not the play: and what matters in business and finance is the outcome, not the process. In business and finance, as in billiards, the imperfections are critical and you can anticipate the result, or understand the outcome, only by appreciating these imperfections.