ABSTRACT
Economists often assume that people are rational. To the extent that people have feelings, and that they all want to live happily, the assumption makes sense, because no one will knowingly reduce their own welfare, other things being equal. But to assume that people could actually maximize welfare as if they were all well informed about the consequences of their actions would be out of place with reality. Still, we can safely assume that people would maximize “ex ante perceived” welfare. That is to say: they would do whatever they can to get the best results as they anticipate at the moment. But in practice they often fail to maximize actual welfare because their perceptions may be flawed, or because they simply do not have the information to make the right choice.
