For a long time it was difficult to make the argument that people might behave irrationally from time to time. Sure we could demonstrate different irrationalities with experiments, but people would always tell me “clearly when it comes to important decisions like the stock market people will be perfectly rational!”
I didn’t think so, but it is hard to experiment with the stock market.
Sadly, the recent events have shown that the market is not as rational as we might hope, and making the case for irrationality is now rather trivial. It is an expensive lesson, but when David Brooks from the NYT makes the case for behavioral economics, I think we have arrived.
Maybe the most irrational tendency of them all is our belief that we are rational!
I just hope this would have been a cheaper lesson.