The “madman theory,” originating in the 19th century, posits that nations will act irrationally in international affairs, potentially triggering conflict. Economists have noted its potential to destabilize markets. Historically, it has been linked to increased trade barriers and reduced foreign investment. Analysts suggest the theory’s unpredictability can foster anxiety among businesses and investors. Persistent uncertainty can discourage risk-taking, impacting economic activity and overall prosperity. The theory’s implications for international cooperation are frequently cited as a significant concern.
Credits: Finance & economics
