There is so much wrong with modern economics it’s difficult to know where to start, but as you’ve kindly begun with agency we ought to address the fact that most people apply very high discount factors to future value without even knowing they are doing so. Thus one key factor that is generally omitted from models is ordinary human ignorance and modest intelligence. The next factor is a consequence of the fact we’re a group species: we invariably follow the herd. That’s why markets always over-shoot, it’s why people buy things their friends have purchased (yet no one actually needs, such as Pet Rocks, iTrash, and economic textbooks), and it’s why bubbles occur. As for the idea that people buy lottery tickets because they’re really buying a temporary illusion, see the first point in this comment…

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