IRRATIONALITY: Rethinking thinking | The Economist - 0 views
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anonymous on 12 Jan 11"Even economists are finally waking up to this fact. A wind of change is now blowing some human spirit back into the ivory towers where economic theory is made. It is becoming increasingly fashionable for economists, especially the younger, more ambitious ones, to borrow insights from psychologists (and sometimes even biologists) to try to explain drug addiction, the working habits of New York taxi-drivers, current sky-high American share prices and other types of behaviour which seem to defy rationality. Alan Greenspan, the chairman of the Federal Reserve, made a bow to this new trend when he wondered about the "irrational exuberance" of American stockmarkets way back in December 1996 (after an initial flutter of concern, investors ignored him). Many economic rationalists still hold true to their faith, and some have fought back by devising rational explanations for the apparent irrationalities studied by the growing school of "behavioural economists". Ironically, orthodox economists have been forced to fight this rearguard action against heretics in their own ranks just as their own approach has begun to be more widely applied in other social sciences such as the study of law and politics. "