The rational choice framework assumes that individuals know what is in their self-interest and make choices accordingly. Do they? When they go to the supermarket (in a developed country with a market economy), arguably they do: In such settings, they know, almost certainly, whether the choice would be beneficial, ex post. Indeed financial markets in the developed market economies (usually) possess the essential characteristics consistent with substantive rationality. However, the diverse performance of economies and polities both historically and contemporaneously argues against individuals really knowing their self-interest and acting accordingly. Instead people act in part upon the basis of myths, dogmas, ideologies, and “half-baked” theories.

Ideas matter; and the way that ideas are communicated among people is crucial to theories that will enable us to deal with strong uncertainty problems at the individual level. For most of the interesting issues in political and economic markets, uncertainty, not risk, characterizes choice making. Under conditions of uncertainty, individuals' interpretation of their environment will reflect their learning. Individuals with common cultural backgrounds and experiences will share reasonably convergent mental models, ideologies, and institutions; and individuals with different learning experiences (both cultural and environmental) will have different theories (models, ideologies) to interpret their environment. Moreover, the information feedback from their choices is not sufficient to lead to convergence of competing interpretations of reality. In consequence, as Hahn (1987: 324) has pointed out, “there is a continuum of theories that agents can hold and act on without ever encountering events which lead them to change their theories.”