Nobel Prize winning economist Amartya Sen, coined the term “Rational Fools” nearly 35 years ago. In his famous paper, Sen criticized the first principle of economics: “Every agent is actuated by only self-interest”. On top of this axiom of rational self-interest lie rational action and rational expectations, leading all the way up to the efficiency of the markets. As mentioned in my earlier post on Galileo, this is basically how science is done: models are devised using abstractions and idealizations. However, if the model turns out to be totally meaningless in explaining the world, then those who stick with such a model are indeed fools, rational fools.
Here is a song that I wrote and animated on such ‘Rational Fools’: