Isn't amazing how some people claim to be able to predict market trends? These people like to base their postulations based on economics principles. The axiom of demand and supply governs market forces and it is thus essential to understand what influences demand and supply.
The fundamental assumption in many human behaviourial theories (and hence economics principles) is that people are rational. Yet all assumptions are doomed by Murphy's Law. To expect people to behave in a predictable rational manner is simply not realistic. Even thinking a person will buy from a place that offers the lowest price may not be true; he/she may buy from some place that perhaps has some sentimental value but sells the item more expensive.
What is only certain it seems is that people are unpredictable. There is still much about the human psyche that baffles even the experts. If that is the case, why are we making the blatant mistake of assuming humans are rational?
The rationale of it all is to grasp general trends, though they are ever-changing. The thing about the human mind is that it constantly attempts to identify patterns and classify objects. It nibbles the huge complex world into smaller, simpler portions to digest. To maintain our sanity, we basically try to simplify our lives and who is to say that is wrong?
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