“For all its intellectual power and its empirical success as a creator of wealth, free-market economics rests on a fallacy, which economists have politely agreed among themselves to overlook. This is the belief that people apply rational calculations to economic decisions, ruling their lives by economic models… The new paradigm sweeping the field, under the rubric of ‘behavioral economics,’ holds that studying what people actually do is at least as valuable as deriving equations for what they should do.” More here from Newsweek International.
