Search results for: the-myth-of-the-rational-market

The Myth of the Rational Market

Author : Justin Fox
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“Do we really need yet another book about the financial crisis? Yes, we do—because this one is different….A must-read for anyone who wants to understand the mess we’re in.” —Paul Krugman, New York Times Book Review “Fox makes business history thrilling.” —St. Louis Post-Dispatch A lively history of ideas, The Myth of the Rational Market by former Time Magazine economics columnist Justin Fox, describes with insight and wit the rise and fall of the world’s most influential investing idea: the efficient markets theory. Both a New York Times bestseller and Notable Book of the Year—longlisted for the Financial Times Business Book of the Year Award and named one of Library Journal Best Business Books of the Year—The Myth of the Rational Market carries readers from the earliest days of Wall Street to the current financial crisis, debunking the long-held myth that the stock market is always right in the process while intelligently exploring the replacement theory of behavioral economics.

Summary of Justin Fox s The Myth of the Rational Market

Author : Everest Media
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Please note: This is a companion version & not the original book. Sample Book Insights: #1 After the theft of his manuscript, Yale University economics professor Irving Fisher went right back to work. He had a habit of overcoming setbacks that might cause a lesser person to despair. His ideas began to have an impact in his lifetime, and after his death, they took off. #2 The idea that the stock market is a place of pure rationality was first put forward by Irving Fisher in the 1920s. However, this idea was not unique to him. In Paris, mathematics student Louis Bachelier studied the price fluctuations on the Paris Bourse in a similar spirit. #3 Bachelier used the assumptions of the bell curve to depict price movements on the Paris exchange. He began with the insight that the mathematical expectation of the speculator is zero, and that price changes in an instant are unpredictable in direction but predictably small. #4 When he died in 1946, one year before Irving Fisher, no one on the trading floor was making use of his ideas. His colleagues were nonplussed by his interest in markets.

The Myth of the Rational Voter

Author : Bryan Caplan
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"Caplan argues that voters continually elect politicians who either share their biases or else pretend to, resulting in bad policies winning again and again by popular demand. Calling into question our most basic assumptions about American politics, Caplan contends that democracy fails precisely because it does what voters want. Through an analysis of American's voting behavior and opinions on a range of economic issues, he makes the case that noneconomists suffer from four prevailing biases: they underestimate the wisdom of the market mechanism, distrust foreigners, undervalue the benefits of conserving labor, and pessimistically believe the economy is going from bad to worse. Caplan lays out several ways to make democratic government work better.

Metaeconomics

Author : Gary D. Lynne
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This book presents the Metaeconomics Framework and Dual Interest Theory, which weave the empathy-based moral and ethical dimension back into key economic questions. Metaeconomics addresses the problem of placing too much emphasis on the market or the government, and thus argues that seeing the link between ego and empathy, self- and other-interest, and market and government will lead to a more just, fair, and sustainable polity. The unique Dual Interest Theory proposes that ego-based self-interest and empathy-based other-interest are joint and internal to each person: it maintains the original proposition from Adam Smith that each person maximizes their own-interest, which Metaeconomics makes clear involves balancing the two joint interests, although self-interest is more primal. The book begins with an explanation of how Metaeconomics connects the other kinds of economics. The book then provides a series of applications of Metaeconomics in heated policy issues, such as elections, finance, family, food, health, natural resources, education, taxes, and extreme inequality, among others. Finally, the book concludes that the only way to save capitalism is to bring empathy into both private and public actions and bring about a more humane balance in market and government.

The Decline of the American Economy

Author : Clement Onyemelukwe
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The Decline of the American Economy is intended to tell Americans that their country’s economy, which fed American power and buoyed up Western civilization in the past two hundred years, is declining. American leaders and politicians, however, refuse to admit that there is a problem. Part of the cause of the problem is politics. It is now a country in which we are seeing the ugly side of democracy where nothing gets done because of partisan politics of democracy. In my mind, however, the greater part of the problem is the failure of US economists to understand and diagnose the country’s basic economic problems. Conventional economics in the US and indeed the West is stale and unable to deal with a world that is getting more technologically complicated every day. For most conventional economists today, the American economy is all about finance: interest rates, inflation, Wall Street indexes, globalization, trade, economic indexes, financial reserves, etc. For those of them who still think analytically, production is made up of only labor and capital, omitting material, despite it being quite oblivious that one cannot produce anything without materials. They continue in the path of increasingly squeezing labor out of production in the name of productivity in order to reinforce the supremacy of finance. These are the basic errors of capitalism. There is the belief that the sum total of the rowdyism of private enterprise creates maximum economic growth and prosperity for all. In the context of capitalism, conventional economists equate capital invested in US dollars as the measure of US economic growth achieved through financial management.

An Arrogant Nation That Creates Its Own Reality

Author : Rogene A. Buchholz
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Americans seem prone to create their own reality in situations that have faced them over the past several years and this arrogance cost the country dearly. Three events stand out as prime examples this arrogance. The first of these events was the war in Iraq which was based on the false reality that the country possessed weapons of mass destruction and had ties to terrorist organizations. The second example was the financial crisis of 2008 which was precipitated by the invention of new and complicated investment vehicles. The last example is the current Trump administration which was filled with falsehoods during the campaign and his first years in office, such that one could not believe anything that this administration said. This book is going to focus on religious reasons for this situation as I believe that it is the Christian religion that is largely at fault for this condition. It is religion that has set up most Americans to believe our leaders when they outright lie and claim to know things beyond what the evidence will support and create a false reality that eventually comes crashing down to disrupt American life. If our nation is ever going to be great it must quit living in a fantasy world and give up a belief in magic as far as its future is concerned. Decisions in government and business must be based on reality as it is and not on what we arrogantly think we can create. The two go together as the more we try and create our own reality the less able we are to come to grips with the reality that actually exists. The place to start is by recognizing the role the Christian religion has played in this phenomenon and letting go of the fantasies that comprise this religion and live a secular life that finds meaning and purpose in this world rather than in some hereafter. We will not successfully deal with all the problems with which we are faced and have a political and economic system that works for everyone until this happens.

Systemic Risk

Author : Helmut Willke
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Five years have passed since the outbreak of one of the worst financial crises the world has ever witnessed. Yet, despite the exceedingly diverse range of publications that have sought to explain the causes and the logic of the crisis, central questions have remained unanswered. Indeed, not only has systemic risk become a buzzword, but it has also developed into an acute threat. But what exactly constitutes the very essence of this concept, and ought it to be considered an economic or a political phenomenon? In addressing these questions, this volume draws upon political economy as an approach to analyze the concept of systemic risk as well as corresponding dilemmas of political order, legitimacy, and expertise. The resulting discussion posits major consequences for the political governance of financial systems in the increasingly interconnected world of the twenty-first century.

Beyond Mechanical Markets

Author : Roman Frydman
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In the wake of the global financial crisis that began in 2007, faith in the rationality of markets has lost ground to a new faith in their irrationality. The problem, Roman Frydman and Michael Goldberg argue, is that both the rational and behavioral theories of the market rest on the same fatal assumption--that markets act mechanically and economic change is fully predictable. In Beyond Mechanical Markets, Frydman and Goldberg show how the failure to abandon this assumption hinders our understanding of how markets work, why price swings help allocate capital to worthy companies, and what role government can and can't play. The financial crisis, Frydman and Goldberg argue, was made more likely, if not inevitable, by contemporary economic theory, yet its core tenets remain unchanged today. In response, the authors show how imperfect knowledge economics, an approach they pioneered, provides a better understanding of markets and the financial crisis. Frydman and Goldberg deliver a withering critique of the widely accepted view that the boom in equity prices that ended in 2007 was a bubble fueled by herd psychology. They argue, instead, that price swings are driven by individuals' ever-imperfect interpretations of the significance of economic fundamentals for future prices and risk. Because swings are at the heart of a dynamic economy, reforms should aim only to curb their excesses. Showing why we are being dangerously led astray by thinking of markets as predictably rational or irrational, Beyond Mechanical Markets presents a powerful challenge to conventional economic wisdom that we can't afford to ignore.

The Myth of the Rational Voter

Author : Bryan Douglas Caplan
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"Caplan argues that voters continually elect politicians who either share their biases or else pretend to, resulting in bad policies winning again and again by popular demand. Calling into question our most basic assumptions about American politics, Caplan contends that democracy fails precisely because it does what voters want. Through an analysis of American's voting behavior and opinions on a range of economic issues, he makes the case that noneconomists suffer from four prevailing biases: they underestimate the wisdom of the market mechanism, distrust foreigners, undervalue the benefits of conserving labor, and pessimistically believe the economy is going from bad to worse. Caplan lays out several ways to make democratic government work better

Positioning Markets and Governments in Public Management

Author : Levine, Helisse
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States and markets are integrated segments of government that rely on one another for efficient operation. Research on the workings and happenings among these two entities is essential to ensure optimal functioning of public management and the political economy. Positioning Markets and Governments in Public Management is an advanced reference publication featuring the latest scholarly research on modern-day issues within political economy. Including coverage on a range of topics such as public policy, healthcare, and immigration, this book is ideally designed for professionals, researchers, and students interested in research and frameworks concerning governments and markets.