Financial Times FT.com

Individual rationality can mean collective irrationality

By Tony Jackson

Published: August 30 2009 19:39 | Last updated: August 30 2009 19:39

Now that even the UK’s chief financial regulator has started kicking the theory of efficient markets, the fun has gone out of it somehow. Moderation in all things: and it is worth remarking that just because markets are inefficient, that need not mean investors are irrational.

The point is contentious, and needs defending. As it happens, I have come across an academic paper which does just that. But first, an observation.

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