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The Rational Expectations Hypothesis: Theoretical Critique

Tomáš Frömmel

E-LOGOS, 2017, vol. 2017, issue 2, 4-12

Abstract: The rational expectations hypothesis as one of the building blocks of modern macroeconomic theory is analyzed critically in this paper. It is concluded that expectations may be rather backward-looking and adaptive since man does not search for all possible pieces of information and his learning by experience from previous mistakes may be imperfect and quite slow. Instead, mixed expectations are evaluated as a reasonable compromise.

Keywords: Expectations; rational expectations; adaptive expectations; mixed expectations; rationality; information; knowledge (search for similar items in EconPapers)
Date: 2017
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DOI: 10.18267/j.e-logos.443

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