#70 Planet Money: The Myth of Rational Markets

The rational school of economics holds that markets make sense. Sure, some people and businesses trade on raw, crazy emotions, but the mistakes cancel each other out. In the end, the rational school argues, market prices make sense.

And then there's real life. Anyone who has spent any time looking at the stock market has to think there's at least a decent chance the whole thing is crazy — prices pinging around, investors making crazy bets, regulators trying to figure out who's flouting the byzantine rules.

Justin Fox, a writer for Time and author of "The Myth of the Rational Market," talks about teddy bears, bubbles and Alan Greenspan.