Werner de Bondt and Richard Thaler

Abstract

Economics can be distinguised from other social sciences by the belief that most (all?) behaviour can be explained by assuming that agents have stable, well-defined preferences and make rational choices consistent with thos preferences in markets that (eventually) clear. An empirical result qualifies as an anomaly if it is difficult to "rationalize," or if implausible assumptions are neccessary to explain it within the paradigm. This column will present a number of such anomalies.