If they are not, the big move in stocks of the last few months will have less footing than rational investors require.

It essentially explores how rational investors would apply decision theory to the problem of investment.

And as interest rates rise, so should the rate at which rational investors discount those future profits.

Past investments were made by rational investors in full knowledge of the tax laws prevailing at the time.

In an irrational world, a rational investor may be at a severe disadvantage.

That strategy guaranteed a profit if the price differential were eliminated, as a rational investor would expect.

A rational investor will choose the outcome that is best for themselves.

Few rational investors would ever opt for this "protection."

"There's no way any rational investor is going to invest in the theater, because his chances of getting paid back are so remote," he said.

Thus, even a rational investor may bank on others' irrationality.