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Efficient Markets

rarugged
Posts: 172
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10/23/2011 2:06:43 PM
Posted: 5 years ago
Are markets (financial and beyond) truly "efficient" in a capitalist economy, where state and economy are mutually exclusive?

How can they be when there are phenomena such as asymmetric information (consumers know less than suppliers) and irrational behavior?

Do we really act rationally in everything we do?

Now, I'm not saying that government intervention is wholly necessary to facilitate a sustainable economy, but I'm just wondering on this point.
If Jesus came back tomorrow, a cross would be the last thing he would want to see.
Ragnar_Rahl
Posts: 19,297
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10/23/2011 2:11:43 PM
Posted: 5 years ago
How can they be when there are phenomena such as asymmetric information (consumers know less than suppliers) and irrational behavior?
Because governments can be irrational too and know even less than consumers.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
darkkermit
Posts: 11,204
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10/23/2011 2:13:51 PM
Posted: 5 years ago
At 10/23/2011 2:11:43 PM, Ragnar_Rahl wrote:
How can they be when there are phenomena such as asymmetric information (consumers know less than suppliers) and irrational behavior?
Because governments can be irrational too and know even less than consumers.

Individuals in government and voters are "rational" in the sense that they seek their own self-interest. However, that doesn't mean it leads to good policy.
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