Reference #366: Thinking in Systems

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Economic theory as derived from Adam Smith rests on two core assumptions, both of which are challenged by bounded rationality. First, the theory assumes that humans are "homo economicus" is who act optimally, entirely rationally, and with complete information. Second, it assumes that when a group of "homo economicus" act in a way towards their own best interest, they are "led by an invisible hand" to produce the best possible outcome for society.

Meadows. Thinking in Systems, 2008. (105, 107)

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