Illusion real play problem2/13/2023 ![]() One reason for this is that in standard economic reasoning the problem of intentional cheating is neglected. ![]() Because of these imperfections the possibility of significant long-lasting valuation problems emerges. However, financial markets are imperfect as Minsky has pointed out. Since money is the unit of account, accounting problems related to the uncertain nature of future economic development makes a continuous readjustment of valuations in money units necessary. The author of this paper suggests that financial markets are particular engaged in intertemporal valuation problems which are common to any kind of economic activity. However, it still needs a better understanding why monetary phenomena especially related to financial markets play an important role in understanding the real economy, the production, consumption and exchange of commodities and services. Now, it has become a respected fact to accept money illusion as a stylized fact of human behaviour. However, with the gradual diffusion of behavioural economics based on experimental research this has changed. Money illusion in economic theory has been an assumption rejected for academic economists for quite some time.
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