[skummetmaelk]

> the assumption that there was no better option than government regulation to afford that same protection.

What other options are there? Letting the market "solve it" is not an option because the incentives are not aligned and market actors are not rational.

[enraged_camel]

> and market actors are not rational.

In addition, it is worth understanding that it is not sufficient for most market actors to be rational. Because even if you have a single irrational actor, game theory takes over and everyone starts acting irrationally in an effort to not get crushed.

[quanticle]

That doesn't make sense to me. If an "irrational" strategy, applied by an individual, can beat the market, that strategy is in fact rational. What you may be referring to is Brad De Long's "The Economic Consequences of Noise Traders" [1], which seeks to create a model to explain why "the market can remain irrational longer than you can stay solvent". Note, though, even in De Long's paper, it's never a single "irrational" investor driving rational investors out of business. Instead, there are large number of noise traders, whose random trading patterns cause markets to fluctuate wildly, depleting the capital stocks of the rational investors, and driving them from the market. The result is entirely dependent on the rational investors having less capital than the noise traders, which certainly wouldn't be the case in a market full of rational investors, with one noise trader.

[1]: https://www.nber.org/papers/w2395

[TheOtherHobbes]

That only works if you assume that "rational" means "make as much as money as possible in the shortest possible time while ignoring any externalities."

Labelling that kind of behaviour as rational is a neat rhetorical trick. But by any objective standard of ethics - or even realistic expectations of medium-to-long-term survivability - it doesn't meet any of the standards required for rational action, any more than any other hoarding behaviour does.

And there's the post-financial view that the real benchmark for rationality isn't competitive acquisition but maximisation of personal and collective opportunity - which is something that markets consistently fail at. (Although again the stock rhetoric claims otherwise - typically with selective interpretation of the available evidence.)

[Der_Einzige]

How can one be a rational trader without an effecient market?

[gshdg]

Not to mention information, time, value, and resource asymmetries. Or externalities.