How (not) to influence people: the contrary tale of John F. Muth

This article discusses economic historians' approach to John F. Muth's theory of rational expectations, which was largely dismissed during the 1960s and not revived until the failure of Keynesian economics in the 1970s. The author discusses the contributions of rational choice theory, including the assertion that agents learn from their mistakes, and compares it to bounded rationality theory which suggests that people are unable to reach optimal decisions because of limited knowledge and computation capacities.