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t. e. Rational expectations is an economic theory that seeks to infer the macroeconomic consequences of individuals' decisions based on all available knowledge. It assumes that individuals actions are based on the best available economic theory and information, and concludes that government policies cannot succeed by assuming widespread ...
Sep 19, 2023 · The rational expectations theory is a concept and modeling technique that is used widely in macroeconomics. The theory posits that individuals base their decisions on three primary factors:...
Jul 9, 2017 · 9 July 2017 by Tejvan Pettinger. Definition of Rational expectations – an economic theory that states – when making decisions, individual agents will base their decisions on the best information available and learn from past trends. Rational expectations are the best guess for the future.
May 1, 1992 · We find that the usual argument in favor of the `rationality' of rational expectations is a partial equilibrium one and that, taking into account the full general equilibrium consequences, rational expectations are dominated (in terms of individual utilities) by `non-rational' expectations.
- Jean-Pascal Benassy
- 1992
Jul 26, 2021 · While a naive test of equality of means between earnings beliefs and realizations shows that earnings expectations are realistic in the sense of not being significantly biased, thus not rejecting the rational expectations hypothesis, our test does reject rational expectations at the 1% level.
- Xavier D'Haultfoeuille, Christophe Gaillac, Arnaud Maurel, Arnaud Maurel
- 2021
The theory of rational expectations (RE) is a collection of assumptions regarding the manner in which economic agents exploit available information to form their expectations. In its stronger forms, RE operates as a coordination device that permits the construction of a \representative agent" having \representative expectations."
Rational expectations says that economic agents should use all the information they have about how the economy operates to make predictions about economic variables in the future. The predictions may not always be right, but people should learn over time and improve their predictions.
