This Book Review contends that the perfectly rational market may be a myth, not just in the sense of a false or over-simplified account of reality, but also in the deeper, anthropological sense of cultural explanation. Part I describes how rational-market theories were developed by financial economists and applied to Wall Street, sometimes without adequate appreciation for the difference between simplified economic models and real-world behavior. Part II contends that if the rational-market theory has met with acceptance that outstrips its empirical support, the favorable reception may be explained in part by the theory’s congruence with broader normative views about laissez faire social ordering.
The Meaning of the Market Myth,
Mich. Bus. & Entrepreneurial L. Rev.
Available at: http://repository.law.umich.edu/mbelr/vol1/iss1/4