Power and Prediction

4 To Decide or Not to Decide

Psst. Wanna know a secret? Economists don’t really believe people are perfectly rational. You know, the caricature of a calculating agent who carefully lays out all the options before them—millions of choices in time and space—knows precisely what their objectives are, whether profit, happiness, or something else, and then makes a choice and sticks to the plan of action. That perfectly rational agent is often what’s portrayed in economists’ models, if you take them literally. And economists do take the predictions of those models seriously. But they know, if only from their own experience, that real people don’t come close to that picture of rationality. Economists roll their eyes when tagged with the phrase ...