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I'm not really following you. Rationality and adaptive markets hypothesis are not mutually exclusive. Moreover you seem to be attacking a strawman of what econ
by dsacco 9y ago
I'm not really following you.
Rationality and adaptive markets hypothesis are not mutually exclusive. Moreover you seem to be attacking a strawman of what economists mean when they use the term, "rational actor". Economists do not actually assume everything is perfect or that the market is perfectly efficient - not even Fama postulates that. Rational behavior is an approximation, and economists are such approximations do not perfectly model the market. That doesn't mean they don't have any predictive ability or empiricism.
I also didn't see any changes suggested by the article - there doesn't seem to be anything in it that's at all prescriptive; how are you drawing a connection to HFT?
- wahern 9y agoThe rational actor model implies things like transitivity of preferences. The rational actor model, even an "approximate" model which accounts for errors and limited information, is fundamentally broken because we know that humans _systematically_ violate such basic premises as transitivity. Put another way, we could just as easily say that non-human animals approximate rational actors because populations rather quickly approach efficient ecological equilibriums. But that sort of framing is not very helpful.