Open AccessAnimal spirits: Keynes' theory of rational investment decision-making under conditions of fundamental uncertainty
Author(s) -
Ognjen Radonjić
Publication year - 2009
Publication title -
theoria
Language(s) - English
Resource type - Journals
eISSN - 2406-081X
pISSN - 0351-2274
DOI - 10.2298/theo0901017r
Subject(s) - animal spirits , irrational number , economics , investment (military) , rationality , positive economics , neoclassical economics , keynesian economics , psychology , epistemology , philosophy , social psychology , political science , law , mathematics , politics , geometry
Keynes's term, animal spirits, has been mistakenly confused with irrational decision-making. However, if we accept Keynes' assumption that future is fundamentally uncertain and nonergodic, animal spirits become key factor that makes continual process of investment decision-making possible. On the other hand, if animal spirits blunt, investment activity dwindles and makes emergence of deep economic crisis likely