Economic Value

We usually think about rationality as being sensible or reasonable. For economists, rationality means when you make a choice, you will choose the thing you like best. Economic rationality accepts that people will act in a relatively predictable way.

Economists use thi...

Economic information comes from all angles in the media, constantly exposing us to endless analysis, commentary, opinion and debate. Yet this onslaught doesn’t seem to make us any wiser in knowing where the economy is heading. For the millions of people trying to read the economy, only a few are ...

These explanations are all irrational for preferring the status quo:

• Loss Aversion: When we make decisions, we weigh the potential for loss more heavily than the potential for gain.
• Sunk Costs: We continue to invest resources like time, mone...