Chapter 7. Muddling Through
Classical economics is based on a simplifying assumption that you and I are “perfectly rational.” That means we know all the information about all of our options (and the effects of choosing each) when making any economic decision, we can make sense of all that information, and we make the choice that will maximize our “utility”—or the usefulness we get from consuming stuff—each and every time. Does that describe your shopping trips very well?
Brian Arthur, and other economists struggling to understand the real world, rejected that notion. Classical theory didn't explain much of the “messiness and the irrationality of the human world.”[1] To them, “economic man” isn't perfectly rational at all. You and I are stumbling ...
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