The Rational Man Hypothesis posits that individuals make decisions that consistently maximize their personal utility or self-interest. In economic and game theory contexts, this assumption implies that market participants, including those in digital asset markets, will act logically to achieve their financial goals. While a simplifying assumption, it serves as a baseline for modeling market behavior and protocol design in decentralized systems. However, real-world behavior often deviates from this theoretical ideal.
Context
The Rational Man Hypothesis is a theoretical concept often referenced when analyzing the economic incentives and game theory of blockchain protocols, such as proof-of-stake systems. Debates concern the extent to which real-world actors in volatile digital asset markets adhere to purely rational behavior. Understanding its limitations helps in designing more robust and resilient decentralized systems that account for varied human actions.
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