In economics, invisible hand or invisible hand of the market is the term economists use to describe the self-regulating nature of the marketplace. You probably have this already from Wiki. Collectively, all the actions of individuals within the marketplace determine what happens in the market. Now, if you assume all individuals act out of a sense of what is best for themselves then the way in which the market moves is based on the ebb and flow of these competing individuals. Thus, when policies are implemented from, say the government, these policies cannot predict each individual who is making decisions within the market. This is where the Law of Unintended Consequences comes into play. You can put powered sugar on the top of your cake to make it look nice but down below the ants are eating the crumbs. The result of how all these decisions being made by people in their own self-interest is considered an "invisible hand" because no one truly knows all of them. An example from investing market-- you have some people who are close to retirement and who might make decisions on purchasing stocks/bonds which are less risky than someone who is his 20s. This is a notion but is it reality? Perhaps, because of the bad market some older people are taking on greater risk in their portfolios in order to "make up" for their losses. Who is to say? The degree to which either may be true be the Invisible Hand.
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In economics, invisible hand or invisible hand of the market is the term economists use to describe the self-regulating nature of the marketplace. You probably have this already from Wiki. Collectively, all the actions of individuals within the marketplace determine what happens in the market. Now, if you assume all individuals act out of a sense of what is best for themselves then the way in which the market moves is based on the ebb and flow of these competing individuals. Thus, when policies are implemented from, say the government, these policies cannot predict each individual who is making decisions within the market. This is where the Law of Unintended Consequences comes into play. You can put powered sugar on the top of your cake to make it look nice but down below the ants are eating the crumbs. The result of how all these decisions being made by people in their own self-interest is considered an "invisible hand" because no one truly knows all of them. An example from investing market-- you have some people who are close to retirement and who might make decisions on purchasing stocks/bonds which are less risky than someone who is his 20s. This is a notion but is it reality? Perhaps, because of the bad market some older people are taking on greater risk in their portfolios in order to "make up" for their losses. Who is to say? The degree to which either may be true be the Invisible Hand.