# What made Friedman believe real-life markets are rational? **URL:** \ **Category:** Great Debates\ **Created:** [November 11, 2008, 10:08pm UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252 "2008-11-11T22:08:54Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [November 12, 2008, 10:33pm UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/61 "2008-11-12T22:33:18Z")
> [@Voyager](#): > > That’s a good point, and , to add to it, corporations can distort the economic climate for its employees. It appears that brokers were incented by their employers to drive people to risky loans - bad for the borrower, but profitable in the short term for the broker and the lender. Every person in the chain that led to this disaster, operated on a basis of improving their short term interests. > > I’m curious about how the fans of deregulation propose that this situation could have been averted without effective regulation. When a good regulatory regime is in effect, there are no problems, and so it is reasonable that those philosophically opposed to regulation claim it should be relaxed. After all, you don’t need to spend money fixing your roof when it isn’t raining. I am not personally an advocate of deregulation (nor regulation), but in this instance, yes, the unregulated (or poorly regulated) entry point, the mortgage brokers probably could stand for some standard setting. However, to write “when a good regulatory regime is in effect there are no problems” is bollocks. A good regulatory regime can certainly reduce excessive risk taking and bad players bollixing things up, but eliminate problems, a foolish expectation. Every regulatory regime introduces perverse incentives and costs. They may be (and in this instance probably are) outweighed by gains, but that does not eliminate probelms. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 12, 2008, 10:47pm UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/62 "2008-11-12T22:47:52Z")
> [@sailor](#): > > The "full information"argument is a straw man. I do not believe _anyone_ has “full information”, much less some government bureaucrat. I am not against regulation; I am against misrepresenting the concept of “free market” as “unregulated market”. A totally free market would be unregulated, but I’m not implying that anyone is in favor of a totally free market. The question is what is the proper balance between the advantages of the free market (which isn’t well defined) and the disadvantages of deregulation in many instances. Considering regulation the equivalent of a command economy is not helpful. Consider China. They are certainly more of a command economy than we are, but less regulated, certainly in terms of product quality. It is certainly possible to specify prices and production levels of a product while not saying anything about the products efficiency or safety. And, btw “government bureaucrat” is a loaded term here. You seem to be wanting to give the impression that those making decisions in the FDA are a bunch of pencil pushers. They are far more likely to be trained statisticians, biologists, or doctors, who can read and understand the research reports. Do you deny that a doctor at the FDA spending full time evaluating clinical trials has a lot more information - and can process it better - than Joe English major or Jill Haircutter looking at a product on drug store shelves? Not every person is qualified to make medical judgments. just like not every person is qualified to be president. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 12, 2008, 10:53pm UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/63 "2008-11-12T22:53:10Z")
> [@wmfellows](#): > > No mate, Der Trihs was saying much more than merely regulation can be useful, he was making old school Sov style claims about greater knowledge on the part of the Bureaucrat, etc. That is thinly disguised command economy thinking. I’ll let him speak for himself, but I’ve never seen him advocate a command economy. Like I said above, stating that a doctor or statistician working full time evaluating clinical trials of a new drug knows more than Joe Common Guy seems rather obvious, and says nothing about command economies. Unless you’re one to see statists under every bed, that is. BTW I am not and have never been a federal bureaucrat. I did deliver mail one summer, that’s about as close as I’ve ever come. My wife is a medical writer, and worked for about a year for a drug company on preparing the application, so I’m somewhat aware of these issues. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [November 13, 2008, 12:13am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/64 "2008-11-13T00:13:23Z")
> [@Voyager](#): > > A totally free market would be unregulated, I disagree and so does F. Hayek. This is like saying the USA is not a free country because you are not free to drive on the left side of the road or drunk. In fact regulation is supposed to enhance, not diminish, freedom. When economists use the term “free market” they do not use it the way you imply. Again, see Hayek. I have explained in other threads what is meant by the term “free market” so I am not going to repeat it here. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 13, 2008, 1:31am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/65 "2008-11-13T01:31:35Z")
> [@sailor](#): > > I disagree and so does F. Hayek. This is like saying the USA is not a free country because you are not free to drive on the left side of the road or drunk. In fact regulation is supposed to enhance, not diminish, freedom. When economists use the term “free market” they do not use it the way you imply. Again, see Hayek. > > I have explained in other threads what is meant by the term “free market” so I am not going to repeat it here. That’s why I modified “free market” with the word “totally” - which you obviously missed. The rest of that sentence reads “but I’m not implying that anyone is in favor of a totally free market.”. Do try to respond to what I actually wrote, not to your fantasy of what I might write. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 13, 2008, 1:35am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/66 "2008-11-13T01:35:03Z")
> [@wmfellows](#): > > I am not personally an advocate of deregulation (nor regulation), but in this instance, yes, the unregulated (or poorly regulated) entry point, the mortgage brokers probably could stand for some standard setting. > > However, to write “when a good regulatory regime is in effect there are no problems” is bollocks. A good regulatory regime can certainly reduce excessive risk taking and bad players bollixing things up, but eliminate problems, a foolish expectation. Every regulatory regime introduces perverse incentives and costs. They may be (and in this instance probably are) outweighed by gains, but that does not eliminate probelms. I should have probably said “disasters” instead of problems. There have been a few stories on Marketplace about regulated regional banks, who are doing just fine in this crisis, making money and loans as if nothing were happening. Regulation seems to have been effective at keeping people from going off a cliff, though it does keep them from eating that good grass near the edge (to mix metaphors a bit.) ---
**Author:** ![BrightNShiny](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)\ **Post date:** [November 13, 2008, 1:52am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/67 "2008-11-13T01:52:49Z")
> [@IdahoMauleMan](#): > > But the last sentence of your first paragraph - and the first sentence of the second paragraph - is a bright, shiny example of the logic that explains why so many citizens choose to disempower themselves in today’s society. Which is distressing to many libertarians. > > It’s too complicated for me to understand. Therefore, I want to toss the keys to a government bureaucrat with absolute power, completely different incentives than me, no accountability for poor performance, and who will be a target for special interests to make unilateral decisions for me. And for everybody else. Even if the other people don’t want it. The purpose of regulations to correct information assymmetry problems is to push maximum information into the marketplace so that _individuals_ can make rational decisions about their choices. It’s not so people can make decisions for you. Now, I’ll grant that the FDA does other things than solely correct information problems, but if libertarians equate all attempts to reduce economic inefficiencies with some sort of “unilateral” decision making authority, then it’s no wonder the majority of people reject libertarianism over and over again. Perhaps you can stop being hyperbolic for a minute and engage in useful economic arguments. > [@](#): > > And Banking Failure = Information Asymmetry is a new one for me. Why isn’t it a failure of government oversight and regulation? Yes, there is an information problem, because proper information to value the mortgages was not being passed through from beginning point to end point. That’s not the only problem, but it is one of the problems. And the way you correct that problem is by setting down oversight and regulation. ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [November 13, 2008, 1:57am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/68 "2008-11-13T01:57:50Z")
How did a discussion about rationality turn into one about regulation? Can’t regulation make markets more rational, by dealing with the information problem? ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [November 13, 2008, 2:21am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/69 "2008-11-13T02:21:25Z")
> [@BrightNShiny](#): > > Yes, there is an information problem, because proper information to value the mortgages was not being passed through from beginning point to end point. Then why were people buying them, without all of the information they needed? ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [November 13, 2008, 2:28am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/70 "2008-11-13T02:28:17Z")
> [@BrightNShiny](#): > > But if libertarians equate all attempts to reduce economic inefficiencies with some sort of “unilateral” decision making authority, then it’s no wonder the majority of people reject libertarianism over and over again. Perhaps you can stop being hyperbolic for a minute and engage in useful economic arguments. I would like to market and sell beer that I make in my basement. Maybe on a stand in front of my house. I cannot, for risk of being arrested. Not by the FDA, of course, but it’s possible they might get involved along the way. How is that anything other than unilateral decision-making authority? Large drug companies spend between $500 million to $1 billion to get a drug through the pipeline to approval, which takes many years. I’m sure they would prefer not to spend that much money, and take much less time to get their products to market. They cannot. How is that anything other than unilateral decision-making authority? ---
**Author:** ![Standup\_Karmic](https://avatars.discourse-cdn.com/v4/letter/s/ac91a4/32.png) [@Standup\_Karmic](https://boards.straightdope.com/u/Standup_Karmic)\ **Post date:** [November 13, 2008, 2:47am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/71 "2008-11-13T02:47:40Z")
> [@Captain\_Amazing](#): > > Can’t regulation make markets more rational, by dealing with the information problem? I do not believe there is any such animal as “more rational.” There is rational, and there is irrational. In my estimation, all people are rational at all times. That is, they make the best decision they can with the information that they have at the moment that they make it. Even those who one might think is making an irrational decision (a former alcoholic bending to stress and having a drink, for example), are, in their own experience, making a rational decision based upon the information they have. Regulation that deals with information asymmetry does not create a market that is any more rational than a market that has greater asymmetry. There is simply a new rational decision because of greater availability of information. ---
**Author:** ![Beware\_of\_Doug](https://avatars.discourse-cdn.com/v4/letter/b/278dde/32.png) [@Beware\_of\_Doug](https://boards.straightdope.com/u/Beware_of_Doug)\ **Post date:** [November 13, 2008, 2:56am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/72 "2008-11-13T02:56:01Z")
> [@Captain\_Amazing](#): > > How did a discussion about rationality turn into one about regulation? We _are_ on the Dope, after all. GD threads are _supposed_ to unravel into shoving matches over facts tangential to the original issue. ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [November 13, 2008, 3:10am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/73 "2008-11-13T03:10:03Z")
> [@wmfellows](#): > > Mate, you either don’t understand a proper economist’s use of the term rationale or don’t wish to use it. Never mind you rather grossly mischaracterise Freidman. The idea of rationality in economics most certainly is not mainly about reduction of government. The concept focuses on the reasonable (if not perfect, certainly) supposition that most of the time people have coherent hierarchies of preferences, and typically speaking free exchange between rational actors [as defined] is an efficient mechanism for balancing offer with demand. While it certainly strikes a blow to the heart of command economies (although the actual failure of command economies rather does that), it does not say anything in particular about “reducing government to nearly nothing” or what level of regulation to enable the market is best. It is more that economists do not understand the proper use of the term “rational”. Individual people are not rational in pursuing their own interests. Groups of people do not “average out” that rationality, they act like mad mobs. People don’t understand what their own interests are and misunderstand when they think that they do because people are fundamentally emotional beings, not rational beings. Rationality is an afterthought to our daily survival instincts and pursuits of pleasure. Modern economics is severely hampered by Friedman’s economic tautology, which is really more like a religion than a science. While thinking about economies may be useful, the tools that are used are poorly understood and not open to improvement. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [November 13, 2008, 3:27am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/74 "2008-11-13T03:27:02Z")
> [@The\_Second\_Stone](#): > > It is more that economists do not understand the proper use of the term “rational”. Individual people are not rational in pursuing their own interests. Groups of people do not “average out” that rationality, they act like mad mobs. People don’t understand what their own interests are and misunderstand when they think that they do because people are fundamentally emotional beings, not rational beings. Rationality is an afterthought to our daily survival instincts and pursuits of pleasure. Define “Rational.” Why is it irrational to pursue pleasure? > [@](#): > > Modern economics is severely hampered by Friedman’s economic tautology, which is really more like a religion than a science. While thinking about economies may be useful, the tools that are used are poorly understood and not open to improvement. What “tautology”? How is a tautology a religion? What is “modern economics” and how is it hampered by Friedman? What tools do you feel aren’t open to improvement? This doesn’t read like an attempt to discuss any issues, but rather reads like the usual “All economics is crap because I don’t understand it” baloney we get here a lot. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [November 13, 2008, 3:36am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/75 "2008-11-13T03:36:33Z")
> [@The\_Second\_Stone](#): > > It is more that economists do not understand the proper use of the term “rational”. Individual people are not rational in pursuing their own interests. Groups of people do not “average out” that rationality, they act like mad mobs. People don’t understand what their own interests are and misunderstand when they think that they do because people are fundamentally emotional beings, not rational beings. Rationality is an afterthought to our daily survival instincts and pursuits of pleasure. It has already been mentioned but apparently bears repeating: economic rationality implies only having ordered preferences, and acting accoring to those preferences. What the preferences _are_ is a matter of taste, not economics. If I value sitting on a beach at a million dollars a year, all the rational man assumptions suggests is that–in that case–I would not take a job for $750,000 a year instead of sitting on a beach. ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [November 13, 2008, 4:15am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/76 "2008-11-13T04:15:55Z")
> [@RickJay](#): > > Define “Rational.” Why is it irrational to pursue pleasure? > What “tautology”? How is a tautology a religion? What is “modern economics” and how is it hampered by Friedman? What tools do you feel aren’t open to improvement? > > This doesn’t read like an attempt to discuss any issues, but rather reads like the usual “All economics is crap because I don’t understand it” baloney we get here a lot. Economics is circular reasoning, and economics is mostly crap. There is very little there to understand. The assumption of a rational man is crap and it is the basic underlying assumption of Friedman’s economic theory. While a few points of Friedman’s theories have been borne out by experience, economics is in no sense a science in the way that physics is a science. It is slightly more a science than common “political science”, but not much. Economics is a way of thinking. I’m going to repost BrightNShiny’s link above to Krugman’s NYT article [Who Was Milton Friedman? | Paul Krugman | The New York Review of Books](http://www.nybooks.com/articles/19857) because he points out some of the problems Friedman created with monetarism. I find Krugman far more cautious in his economic prescriptions and pronouncements and a better explainer of the economic way of thinking than Friedman. Friedman embodied everything wrong with economists: he knew his ideas were correct, when it was all based on erroneous suppositions such as rational people. When that is what you’ve got for a foundation, you cannot build theoretical structures that will withstand great economic stresses. Friedman (and Greenspan) was certain that deregulation was wonderful. Millions around the world will starve because of this current economic crisis that could have been avoided if the acolytes of the “free market” and deregulation had not been so arrogantly certain and mortgaged our futures on it. The debt swap market should have been regulated, but the entire government apparatus had been cowed by the deregulation propaganda and it was not politically possible. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [November 13, 2008, 6:53am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/77 "2008-11-13T06:53:02Z")
> [@Voyager](#): > > Let’s consider what would happen with a privatized drug regulatory system. > > First, even among honest regulators, requirements for proving efficacy will diverge. It’s plenty expensive getting FDA approval today - doing it for n regulatory agencies will make it even more so. > Second, the companies wanting to maximize profits will quickly form their own “regulatory” agency, which will rubber stamp approvals for their drug, with no doubt authentic looking tests. > In the deregulatory fantasy world, each consumer will check on ratings of each private regulatory agency and make decisions accordingly. Unfortunately, consumers actually have to work and are not likely to have the time, especially when the bogus ones are cheaper. Even if they read the details, will they understand them? I can see the holes in the claims by the fake boner pill company ads, but how many people have a science education? I doubt I could read and understand the full report. > When we start, people will assume that medicine is safe in the future because it was in the past. I worked for AT&T during deregulation, and about a year after you were able to buy a phone our sales went up again. The reason was that the average consumer assumed that all phones would work forever, and thus bought on price. They soon discovered that cheap phones were junk, and came back. That’s fine for telephones, not so fine for medicine that will either prevent a heart attack or won’t. Not all companies who will sell problem drugs will do it out of malice. Plenty of drugs get rejected when submitted with the best of intentions and with total scientific honesty. There is no way of telling, without expensive and time consuming clinical trials, if a drug is safe or not. > > So many of our problems come from people deregulating and saying “what can go wrong.” See Greenspan’s testimony. And I might remind you that the Preamble talks about “promote the general welfare.” Privatizing drug approvals will not do that. These are all variations on the same straw-man argument - you imagine the worst possible way in which the market could adapt, then use that to argue against deregulation. Perhaps you should pay more attention to how the market works in areas where there is currently no regulation guaranteeing efficacy and quality. Or in areas where the market has decided that the government regulations are inadequate. If people have to learn the specifics of every drug they take, and do all this research on their own to avoid being screwed, how come they don’t have to do the same when buying cars? Or computers? The answer is because the market develops _many_ intermediaries and mechanisms to transmit the essential information to the customer. They include brand value, review magazines, trusted sources of advice (i.e. your doctor, or [TomsHardware.com](http://TomsHardware.com)), the media, insurance companies, a product’s competitors, standards agencies with real reputations (ISO certification, industry certifications, NAUI and PADI for divers, etc) or myriad other ways that quality information gets to people. Different industries evolve their own mechanisms. Your average computer buyer knows nothing about computers. And yet, they rarely accidentally buy computers made out of styrofoam, or old 286’s advertised as the latest uber-Pentium. They get enough information about the product just through Osmosis and the reliance on trusted intermediaries (i.e. buying from Dell instead of from Ivan’s Crazy Computer Emporium in Russia). I see no reason whatsoever that a functioning market in drugs could not exist without FDA approval. There would still be regulations - transparency laws, mainly, forcing companies to be held accountable for risk studies and to make them public, for example. The biggest advantage of this is that drug prices would plummet. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [November 13, 2008, 9:46am UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/78 "2008-11-13T09:46:44Z")
> [@The\_Second\_Stone](#): > > Economics is circular reasoning, and economics is mostly crap. There is very little there to understand. The assumption of a rational man is crap and it is the basic underlying assumption of Friedman’s economic theory. While a few points of Friedman’s theories have been borne out by experience, economics is in no sense a science in the way that physics is a science. It is slightly more a science than common “political science”, but not much. Economics is a way of thinking. I’m going to repost BrightNShiny’s link above to Krugman’s NYT article [Who Was Milton Friedman? | Paul Krugman | The New York Review of Books](http://www.nybooks.com/articles/19857) because he points out some of the problems Friedman created with monetarism. I find Krugman far more cautious in his economic prescriptions and pronouncements and a better explainer of the economic way of thinking than Friedman. Krugman is pretty much correct about Friedman, of course. But he’s still an economist. If I actually took the beginning of your post seriously, then I’d be forced to discount Krugman’s opinions. He could still be right about Friedman, but if economics is mostly crap, then _he’d be right for the wrong reasons_. Nonsense. Krugman isn’t correct just by chance. He’s earned just as significant a reputation as Friedman in theoretical matters, while simultaneously being more honest in his popular writings (at least with respect to matters of economics). Krugman doesn’t demolish Friedman’s ideas with sociology or psychology or some other off-topic social science. Rather, he uses his profound knowledge of _economics_, both theory and history, to pick apart Friedman’s various short-comings. This is a distinction that you lose in your blind haste to dump on the subject. You’re more than eager to discount the science entirely when you think you’re making a cheap rhetorical point, but later on you trust Krugman for the same reason that all intelligent people would do so: he knows his shit, which means he’s worth listening to. And this would not be the case if economics were so circular as you falsely claim. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [November 13, 2008, 4:44pm UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/79 "2008-11-13T16:44:49Z")
A geffen good is an inferior product, which because it is priced relatively cheaply, has a market. Friedman’s market analysis explains these goods very well…do they really exist? ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [November 13, 2008, 5:06pm UTC](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252/80 "2008-11-13T17:06:02Z")
> [@Standup\_Karmic](#): > > Regulation that deals with information asymmetry does not create a market that is any more rational than a market that has greater asymmetry. There is simply a new rational decision because of greater availability of information. I’m willing to be proved wrong on this, because it’s been a LONG time since I’e studied economics and rational choice theory, but I thought true rationalitiy assumed complete information. With incomplete information, the best you have is bounded rationality (bounded by the limits of your knowledge). [Previous page](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252.md?page=3) [Next page](https://boards.straightdope.com/t/what-made-friedman-believe-real-life-markets-are-rational/472252.md?page=5)