Source: David Friedman’s Substack
by David Friedman
“The central assumption of economics is that individuals are rational, have objectives and tend to take the actions that best achieve them. For that assumption to be useful one must add to it restrictions on what those objectives might be, since if one is completely agnostic on the subject any possible behavior can be explained by assuming a suitable objective. Since we have a good deal of information on what humans value, both by introspection and by observing other humans, we can deduce from the rationality assumption a good deal about what humans will do. … The individual about whom I have most information is myself, which makes it interesting to see how consistent the rationality assumption is with my behavior.” (05/06/25)