The classical theory of rational choice is built on several important internal consistency conditions. In recent years, the reasonableness of those internal consistency conditions has been questioned and criticized, and several responses to accommodate such criticisms have been proposed in the...

Our chapter surveys the literature on why market prices may provide distorted signals, i.e., diverge from socially efficient prices. There are a number of reasons for this to occur, such as price controls, externalities, imperfect competition, taxes, trade controls, etc. Broadly, market failure...