Economic theory is built on assumptions about human behavior—assumptions embodied in rational-choice theory. Underlying these assumptions are implicit notions about how we think and learn. These implicit notions are fundamentally important to social explanation. The very plausibility of the explanations that we develop out of rational-choice theory rests crucially on the accuracy of these notions about cognition and rationality. But there is a basic problem: There is often very little relationship between the assumptions that rational-choice theorists make and the way that humans actually act and learn in everyday life. This has significant implications for economic theory and practice. It leads to bad theories and inadequate explanations; it produces bad predictions and, thus, supports ineffective social policies.

Rational expectations models have become a staple of economic theory and the basis for a Nobel Prize. This article argues that rational expectations analysis suffers from potentially fatal flaws that seriously undermine its value in understanding many market phenomena. Using the example of financial markets, the article illustrates how the rational expectations approach has worked to obscure, rather than to illuminate, our understanding of speculation and speculative markets. This misguidance raises problems for law and policy.

Challenging problems for moral and legal culpability, as Jennifer Radden has impressively brought to our attention, are generated when people suffering from dissociative-identity disorder commit various transgressions. In the type of case of interest in this paper, “Self2” of a two-self multiple is unaware that “Self1” has committed a crime and has played no role in Self1's commission of the crime. This case generates, among others, the following pressing problems. Is Self2 morally to blame for Self1's deed, and is the multiple itself either morally or legally culpable for this deed? In this paper, after critically discussing some of Radden's views on these issues, I defend negative responses to both these questions by appealing to central constituents of a theory of moral responsibility.

Consider the following examples of behavior by Smith:

1. Smith, seated at her restaurant table, gives an order to the waiter;

2. Smith gets into a cab and names a destination;

3. Smith agrees to Jones's suggestion that they go back to Jones's apartment for a few drinks;

4. Smith casts her vote in some election.

In each of these instances what can Smith be understood as consenting to? Is she consenting to (1) pay the bill for whatever meal she orders; (2) pay the fare for the journey to her named destination; (3) sexual intimacy with Jones; and (4) accept the authority of whatever individual or political part is elected? The fact that Smith does not actually express her consent to each of these states of affairs or outcomes need not mean that she is not giving her consent to them. The idea that individuals can give their consent in ways other than by means of a formal verbal expression of agreement is a familiar, if controversial, one.