Rationality

From a recent article in Money Week:

......to behaviouralists it's no surprise to find investors behaving irrationally. James Montier, formerly of Société Générale, points to an experiment he took part in involving over 1,000 players who were asked to pick a number between 0 and 100 that they believed would be close to two-thirds of the average number picked.

There's no correct answer – it depends on what others do. But there is a clear maximum answer: 67, which would require every other player to have chosen 100. What was "more than slightly alarming" was that there were a large number of answers above 67. All 1,000 players were professional investors.

This goes a long way in helping understand just why Montier is so fervently opposed to the Efficient Market Hypothesis