3min chapter

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Rational Minds Part 4: The Blind Leading The Blind - David Hirshleifer

The Joe Walker Podcast

CHAPTER

The Importance of Common Sense in Decision Making

If people don't act according to the axioms of rationality, does that mean they are irrational or is it an indictment on the model as being unrealistic? When we evaluate is somebody behaving irrationally, we always have a model in our head, right? So we can't really say that something is a mistake unless we have a model of what is the situation that the decision maker is facing. And then relative to that model, we can identify the mistake.

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