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 Originally Posted by Poopadoop
This doesn't seem wildly different to what I would expect, it only makes it more encompassing than just being about money:
People make bad decisions all the time, economically and otherwise. Look at all the things where people don't even understand what rational behavior is, like the Gambler's Fallacy.
So it's clearly a very caveat-ridden assumption that doesn't belong at the core of a serious theory. No economist has ever come up with a good explanation for these irrational behaviors afaik.
Investopedia can be confusing regarding economics at times. Economists use very confusing language that is different outside of economics. That link does not give the right impression of what rationality in economics is. If it is confusing, don't worry, economists are major dummies at naming things.
In economics, rationality is merely an assumption that people want what they want and that they want more of what they want as opposed to less of what they want. All the examples one can think of "irrational behavior" still fall under this assumption. Economists used a very misleading word to describe this assumption. This is the profession that put the output on the x axis. Believe me, they are the absolute worst messengers.
Do you have any questions on this?
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