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Redefining Reality - The Intellectual Implications of Modern Science

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self-interest. Second, the large-scale behavior <strong>of</strong> the economy is<br />

the result <strong>of</strong> well-behaved small-scale interactions. <strong>The</strong> 20 th century<br />

would see advances that undermined both <strong>of</strong> these assumptions.<br />

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second—that small-scale interactions give rise to predictable largescale<br />

behavior. This predictable behavior is what is known as the<br />

(see below). According to this idea, the economy has<br />

an equilibrium point, but that does not mean that it is static. Instead,<br />

the large-scale economy alternately grows and contracts around a<br />

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Because people are rational and self-interested and because their<br />

decisions take time to implement—the actions <strong>of</strong> those in the<br />

market lag behind the timeframe <strong>of</strong> the actual changes in the market<br />

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