Rational decisions not always made in markets from "summary" of The General Theory of Employment, Interest, and Money by John Maynard Keynes
The assumption that all agents in the market make rational decisions is a fundamental pillar of classical economic theory. According to this view, individuals possess perfect information, weigh all available options, and make choices that maximize their utility. However, this idealized notion does not always hold true in the real world. In reality, human behavior is often influenced by emotions, psychological biases, and incomplete information. As a result, individuals may not always make decisions that are in their best interest from a purely rational standpoint. This can lead to market outcomes that deviate from the predictions of traditional economic models. For example, during times of uncertainty or financial distress, individuals may resort to herd behavior, following the actions of others rather than making independent, rational choices. This can result in market bubbles, panics, and other phenomena that are difficult to explain using standard economic ...
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