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There's a big difference between micro and macro. Macro is basically predictions as you say because in the end it's largely underpinned by market expectations w
by colinmhayes 4y ago
There's a big difference between micro and macro. Macro is basically predictions as you say because in the end it's largely underpinned by market expectations which are not always rational. Micro on the other hand looks at the choices of individuals, which are by definition at least somewhat rational. Individuals will always make the choice that they believe will maximize their utility, so the whole thing is really just equations whose derivative you set equal to 0 in order to maximize/minimize.
- JumpCrisscross 4y ago> which are by definition at least somewhat rational Or can be demonstrably arbitraged to take advantage of the irrationality in a tangible, quantifiable and repeatable way. Put-call parity, substitution, et cetera.