Insights from psychology about individual behavior – examples of which include limited rationality, low self-control, or a taste for fairness – predict several important types of observed market outcomes that fully-rational economic models do not.
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© 2025. Kent A. Clark Center for Global Markets.
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Responses weighted by each expert's confidence
© 2025. Kent A. Clark Center for Global Markets.
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University |
Vote |
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Bio/Vote History |
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 Philippe Aghion |
Harvard | Did Not Answer | Bio/Vote History | |
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 Franklin Allen |
Imperial College London | Bio/Vote History | ||
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I think this is true in many markets. In financial markets it may be less true because of the money at stake but they matter there too.
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 Pol Antras |
Harvard | Bio/Vote History | ||
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Still, models with fully rational agents provide a perfectly good approximation for explaining many market outcomes!
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 Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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 Timothy J. Besley |
LSE | Did Not Answer | Bio/Vote History | |
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 Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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 Nicholas Bloom |
Stanford | Bio/Vote History | ||
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 Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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 Elena Carletti |
Bocconi | Bio/Vote History | ||
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 Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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 Paul De Grauwe |
LSE | Did Not Answer | Bio/Vote History | |
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 Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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 Ernst Fehr |
Universität Zurich | Did Not Answer | Bio/Vote History | |
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 Xavier Freixas |
Barcelona GSE | Did Not Answer | Bio/Vote History | |
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 Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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 Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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 Luis Garicano |
LSE | Did Not Answer | Bio/Vote History | |
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 Francesco Giavazzi |
Bocconi | Did Not Answer | Bio/Vote History | |
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 Rachel Griffith |
University of Manchester | Did Not Answer | Bio/Vote History | |
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 Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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 Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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 Martin Hellwig |
Max Planck Institute for Research on Collective Goods | Bio/Vote History | ||
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Is "fully rational" about optimization or about expectations? Is "market outcomes" about anything in the real world or about markets?
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 Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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 Henrik Kleven |
Princeton | Did Not Answer | Bio/Vote History | |
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 Botond Kőszegi |
Central European University | Bio/Vote History | ||
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 Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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while I see the impact of nudging on macro outcomes (e.g. pension fund participation), I am uncertain whether this is due to irrationality.
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 Per Krusell |
Stockholm University | Bio/Vote History | ||
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 Eliana La Ferrara |
Harvard Kennedy | Bio/Vote History | ||
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 Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Tend to agree, but depends on setting & details. Often traditional models can be extended to explain as well. Point is not always to predict
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 Costas Meghir |
Yale | Did Not Answer | Bio/Vote History | |
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 Peter Neary |
Oxford | Did Not Answer | Bio/Vote History | |
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 Kevin O'Rourke |
Oxford | Bio/Vote History | ||
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 Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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 Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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Psychology can be useful but most puzzling phenomena can also be explained by rational models. What you mean by rationality matters.
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 Torsten Persson |
Stockholm University | Bio/Vote History | ||
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 Christopher Pissarides |
London School of Economics and Political Science | Did Not Answer | Bio/Vote History | |
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 Richard Portes |
London Business School | Bio/Vote History | ||
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See many Thaler ‘anomalies’ columns over the years.
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 Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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 Lucrezia Reichlin |
London Business School | Bio/Vote History | ||
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 Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Still, as forcefully argued by Steve Ross, fully-rational economic models can go a long way to explain many of these market outcomes.
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 Hélène Rey |
London Business School | Did Not Answer | Bio/Vote History | |
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 Antoinette Schoar |
MIT | Bio/Vote History | ||
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 John Van Reenen |
LSE | Bio/Vote History | ||
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 John Vickers |
Oxford | Bio/Vote History | ||
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 Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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 Beatrice Weder di Mauro |
The Graduate Institute, Geneva | Did Not Answer | Bio/Vote History | |
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 Karl Whelan |
University College Dublin | Did Not Answer | Bio/Vote History | |
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 Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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I don't know enough
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 Fabrizio Zilibotti |
Yale University | Bio/Vote History | ||
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