Economics has come full circle

Herman Brodie | Prospecta | 10 February 2020

Classical economists often incorporated human behaviour into their thinking. For example, Adam Smith talked about the conflict between "the passions" and "the impartial spectator". But in the 1960s and 1970s, economists sought to introduce more mathematical tractability into the discipline, and homo economicus - the great rational agent of economic theory - was born. It was not until the 1990s, when psychologists discovered additional limits to arbitrage whi...

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