That’s a good point, and kinda reminds me of the Efficient Market Paradox, which basically says an efficient market is impossible since there would be no profit to be made, and hence, no point in participating. But if people drop out because of that, inefficiencies will invariably pop again, thus presenting an opportunity for those seeking to profit, which of course only ends up restoring the efficiency.
So in essence, the market is always just teetering on the edge of efficiency, never fully getting there yet never straying too far either. Perhaps there’s a corollary here (or a similar paradox) that explains why the assumption of rationality, as ridiculous as it seems at face value, is in fact also valid and reasonable.
That’s a good point, and kinda reminds me of the Efficient Market Paradox, which basically says an efficient market is impossible since there would be no profit to be made, and hence, no point in participating. But if people drop out because of that, inefficiencies will invariably pop again, thus presenting an opportunity for those seeking to profit, which of course only ends up restoring the efficiency.
So in essence, the market is always just teetering on the edge of efficiency, never fully getting there yet never straying too far either. Perhaps there’s a corollary here (or a similar paradox) that explains why the assumption of rationality, as ridiculous as it seems at face value, is in fact also valid and reasonable.