Sunstein's behavioral critique of Hayek is that the same problems that make deliberation go wrong can make the price system go wrong—producing fads, fashions, and mispricing for non-trivial periods (as Shiller's 'Irrational Exuberance' argues)—but markets have correctives that make such errors less enduring, and prediction markets specifically show no empirical evidence of such failures.

causalpending

Speaker

Cass Sunstein

Evidence Quote

Schiller's both irrational exuberance I think has been vindicated... suggesting that some prices are wrong even though their aggregation because the people who are contributing to the prices are wrong

Source

Sunstein on Infotopia, Information and Decision-MakingEconTalk
Created: 6/15/2026, 9:20:35 AM

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