 Rational Expectations and Learning from Experience*The Quarterly Journal of Economics, 1979, vol. 93, issue 1, 47-57 Abstract: I. Introduction, 47.—II. The model, 49.—III. Conclusions, 54. The universal form of conscious behavior is thus action designed to change a future situation inferred from a present one. It involves perception and, in addition, twofold inference. We must infer what the future situation would have been without our interference, and what change will be wrought in it by our action. Fortunately or unfortunately, none of these processes is infallible, or indeed ever accurate and complete (Knight, 1921, pp. 201–02). The correspondence of expectations that makes it possible for all parties to achieve what they are striving for is in fact brought about by a process of learning by trial and error which must involve a constant disappointment of some expectations. The process of adaptation operates, as do the adjustments of any self-organizing system, by what cybernetics has taught us to call negative feedback: responses to the differences between the expected and the actual results of actions so that these differences will be reduced (Hayek, 1976, pp. 124–25). Date: 1979 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:93:y:1979:i:1:p:47-57. Ordering information: This journal article can be ordered from Access Statistics for this article The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College |
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