Economic liberalism is a doctrine that states that the best way to achieve economic development and efficiency in the allocation of resources is through a free market without the intervention of the State (regulations, taxes, etc.). Basically, the underlying assumption is a certain rationality in the functioning of the market, and the question or debate that I propose goes in this line, if free markets work by common sense operators. Many thanks in advance for your answers.
Hi, Pedro,
Consider reviewing the works of Abraham Briloff, especially his 1972 (and maybe also 1967-ish) works. Also see Simon (1955?) on "bounded rationality." Briloff calls into question rationality. Simon feels that it is there. As best that I can tell, we're fairly rational when we're not scared. When we're scared, we do what our peer group does. I have a paper on the "scared" response:
Reactions to the 2008 economic crisis and the theory of planned behavior. The paper that I am working on now shows people returning to more rationality than not. Hope that this helps.
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