The Rationality Myth

Classical economics assumed people make perfectly logical decisions. They weigh all options, calculate probabilities, and maximize their utility. Behavioral economics proved this assumption spectacularly wrong. Experiments show people will reject free money if they perceive the offer as unfair — something no "rational" agent would ever do.

Real humans use mental shortcuts, fall for emotional traps, and make predictable errors that no rational agent would commit. We buy lottery tickets despite terrible odds, overpay for insurance, and hold losing investments far too long. Our brains are powerful but systematically flawed.