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Behavioral economics play a much larger role in macro economics than most people believe, explaining such things as sudden drops and surges in share prices that
by mixmax 18y ago
Behavioral economics play a much larger role in macro economics than most people believe, explaining such things as sudden drops and surges in share prices that classical economics have serious problems with. Unfortunately, as the article argues, much economic commentary by massmedia is stuck in the era of classical economics.
If you want to learn more, and gain some insight into how these mechanisms work I recommend watching Daniel Kahneman's 45 minute Nobel prize lecture from 2002: http://nobelprize.org/nobel_prizes/economics/laureates/2002/kahneman-lecture.html http://nobelprize.org/nobel_prizes/economics/laureates/2002/...
- bsaunder 18y agoI think there's a more fundamental problem with any commentary (economic or otherwise) by mass media. It hardly seems objective these days. There's also a self-fulfilling prophecy problem with media coverage of economic information. If you tell everyone things are getting bad, it would seem rational that they would sell their assets (making things worse). If you say there's no bottom in sight, not many people would feel like re-entering the market.
- maurycy 18y agoYes. This is a double-edged sword, though. The similar bubble happens if you constantly read that some assets are going to rise infinitely (eg, real estate). See Soros' reflexivity.