[Taek]

>While markets are efficient they famously at times have a habit of acting irrational and counter-productive to participants needs. This is where in the present times human intervention (occasionally) out-performs pure markets.

I think that this happens because markets are not yet perfect. You end up with conditions where one party can gain by doing damage to the rest.

As time moves forward, I imagine that markets will get a lot better. Game theory is a growing field where people are exploring this problem. I think that in many ways, cryptocurrencies address this problem for certain applications, and will continue to improve as we figure out exactly where cryptocurrency is most useful to us.

[vidarh]

Markets can not change the fact that humans are not rational, no matter what assumptions people like to make about that. Game theory is littered with examples where the rational behaviour is X, but where humans largely favour decision Y because X rubs us the wrong way in some way or other. E.g. humans are in some cases perfectly content to put our lives at risk out of sheer stubbornness if someone has annoyed us enough - accounting for that in systems aiming for perfection is at best incredibly hard, but far more likely pretty much impossible. You won't see perfect markets. There is no "yet".

[runeks]

I don't think this is about human rationality, or a lack thereof. It's a about whether individual rationality leads to group rationality. Whether the interest of the individual is also the interest of the group. This story is a good example: https://www.youtube.com/watch?v=sb5hr-f3Tfg#t=95

[dmix]

This sums up my original comment perfectly, thanks.

[ska]

I think you are right that things will improve, but for exactly the wrong reason. Truly efficient markets are the toy problems of economic modeling, not typically achievable in real problem domains. Perhaps counter intuitively, I think we will gain efficiency by getting better at modeling the inefficiencies... but the end result of this is no more a "pure" (in your sense) market than a modern particle model consists of Aristotelian atoms.