The Simonian bounded rationality hypothesis and the expectation formation mechanism

Tadeusz Kowalski

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract. In the 1980s and at beginning of the 1990s the debate on expectation formation mechanism was dominated by the rational expectation hypothesis. Later on, more interest was directed towards alternative approaches to expectations analysis, mainly based on the bounded rationality paradigm introduced earlier by Herbert A. Simon. The bounded rationality approach is used here to describe the way expectations might be formed by different agents. Furthermore, three main hypotheses, namely adaptive, rational and bounded ones are being compared and used to indicate why time lags in economic policy prevail and are variable. JEL Codes: D78, D84, H30, E00.

Keywords: Keywords: bounded rationality; substantive and procedural rationality; expectation formation; adaptive and rational expectations; time lags (search for similar items in EconPapers)
JEL-codes: D78 D84 E00 H30 (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Poznan Unversity of Economics Review Number 1, 2002.Volume(2002): pp. 5-24

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