Expectations formation - rational or adaptive or…

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JournalJOURNAL OF ECONOMIC BEHAVIOR
DatePublished - Dec 1994
Issue number3
Volume25
Number of pages21
Pages (from-to)329-349
Original languageEnglish

Abstract

This paper reports on an experimental investigation in which subjects are appropriately motivated to reveal their expectations of two times series. Two hypotheses are investigated: that expectations are formed rationally; that they are formed adaptively. The paper concludes that the 'truth' is somewhat in between: subjects are trying to behave rationally, but frequently in a way that appears adaptively. A more general hypothesis is tentatively proposed.

    Research areas

  • PRICE FORECASTS, MARKETS

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