Do you think you’re a better than average driver? Or a better than average lover? Or a better than average trader? Odds are, you do. Unfortunately, we can’t all be better than average drivers, lovers or traders. This illusion of superiority is a common cognitive bias in most things. So what happens when we construct economic models designed around the idea that the entire economy is “rational” or even understands the information that goes into the pricing of securities, assets or even goods and services? Well, you get things like the Efficient Market Hypothesis. “The key idea behind the theory is that of market ... (full story)