Irrational Expectations

Lynn Stout

No aq63c_v1, LawArchive from Center for Open Science

Abstract: 3 Legal Theory 227 (1997) Rational expectations models have become a staple of economic theory and the basis for a Nobel Prize. This article argues that rational expectations analysis suffers from potentially fatal flaws that seriously undermine its value in understanding many market phenomena. Using the example of financial markets, the article illustrates how the rational expectations approach has worked to obscure, rather than to illuminate, our understanding of speculation and speculative markets. This misguidance raises problems for law and policy.

Date: 2018-06-25
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Persistent link: https://EconPapers.repec.org/RePEc:osf:lawarc:aq63c_v1

DOI: 10.31219/osf.io/aq63c_v1

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