03 September 2009

Rationality again

John Kay in the Financial Times on why its never rational to be wrong..When farmers in Papua New Guinea plant only half their field because they believe envious neighbours might employ witchcraft if they plant more..are they being rational or not?According to Martin Cox, this is a rational decision, because it follows a consistent set of beliefs..but Kay asks, is this really rational?

Different social contexts lead some people to believe in juju and others to believe that the alchemy of securitisation can turn subprime mortgages into triple A obligations. The test of the rationality of these beliefs is not their internal consistency, but whether they guide us to wise decisions. By that criterion, neither scores well.

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