...here you have a division between two camps. One says that imperfect rationality changes everything; the other that the assumption of rationality is still the best game out there, or at least sets a baseline from which departures must be justified at length.
Which camp is right? My thought: it depends on the field, for reasons not entirely clear to me. Let me talk about two fields I know reasonably well: macroeconomics, which I think I know pretty well, and finance, where I am much less well-informed in general but am pretty familiar with at least some international areas. What strikes me is that vaguely Thalerish reasoning is hugely important in one, in the other not so much.
どちらの意見が正しいのだろうか? 私の考えは、それは分野次第、というものだ。そうなる理由は私には良く分からない。私がそこそこ知っている2つの分野を取り上げてみよう。一つはマクロ経済学で、私はこの分野を良く知っていると自負している。もう一つはファイナンスで、大体においてマクロ経済学ほど詳しくはないが、少なくとも国際経済学関連についてはかなり精通している。私の見たところでは、大雑把に言ってセイラー的な推論はある分野では非常に重要だが、もう一つの分野ではそれほどでもない。


...efficient markets theory...is wrong in detail – there are lots of anomalies. In international finance, for example, there is the well-known uncovered interest parity puzzle: differences in national interest rates should be unbiased predictors of future changes in exchange rates, but in fact turn out to have no predictive power at all. And anyone who believed that rationality of investors precluded the possibility of massive, obvious mispricing – say, of subprime-backed securities – has not had a happy decade.
Yet the broader proposition that asset price movements are unpredictable, that patterns are subtle, unstable, and hard to make money off of, seems to be right. On the whole, it seems to me that considering the implications of rational behavior has done more good than harm to the field of finance.


That’s where Robert Lucas came in: trying to rationalize the observed facts of business cycles with perfectly rational behavior in the face of imperfect information. This approach had a huge effect on the practice of macroeconomics, at least academic macroeconomics. But at this point we can safely say that it took the whole field down a rabbit hole. Wage- and price-setting does not reflect the best available information about future monetary policies; if it did, we’d be seeing wage contracts moving rapidly around as Kevin Warsh’s prospects on Predictit fluctuate. Everything we know suggests that there is a lot of nominal downward rigidity and a lot of money illusion in general.
And assertions that this might be true in practice, but can’t be true in theory, and must therefore be assumed away both in research and in policy have been hugely destructive.