In
Keynesian economics, a concept describing how rational
investors are expected to
buy and
sell securities. According to the theory, in a
free market, rational investors tend to buy securities they believe everyone else thinks are valuable, rather than the ones they themselves believe are valuable. That is, because
demand for securities drives
prices up and down, rational investors attempt to estimate their demand rather than their
intrinsic values. The term is based on a fictional newspaper contest in which contestants are asked to identify one woman among six that other people think to be the most beautiful, rather than the woman the contestant likes best himself.