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Testing of the Rational Expectations Hypothesis
Econometrica, 1980This paper develops a test of the rational expectations hypothesis advanced by Muth [18]. The framework considered here allows for multiperiod expectations of several endogenous variables, with or without lagged exogenous variables. In conventional (linear) models, the hypothesis implies that the expectations are linear in certain relevant variables ...
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A new perspective to rational expectations: Maximin rational expectations equilibrium [PDF]
, 2010 We introduce a new notion of rational expectations equilibrium (REE) called maximin rational expectations equilibrium (MREE), which is based on the maximin expected utility (MEU) formulation. In particular, agents maximize maximin expected utility conditioned on their own private information and the information that the equilibrium prices generate ...
Luciano De Castro +2 more
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Overstatement and rational market expectation [PDF]
Economics Letters, 2009 Abstract When an agent overstates his/her true performance, a rational market can still correctly guess the true performance. This paper shows, however, that such rational market expectation and a profit-maximizing principal can exacerbate the lack of productive effort by the agent.
Illoong Kwon, Eunjung Yeo
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ON THE RATIONALITY OF THE RATIONAL EXPECTATIONS HYPOTHESIS
Australian Economic Papers, 1985This note argues that the claim that the rational expectations hypothes is is a method of endogenizing the process of expectations formation, which is based on the principles of optimization, is not justified. The essential model-in dependent property of the rational expectations hypothesis is that forecasts are unbiased.
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Rational behavior and rational expectations
Journal of Economic Theory, 1990zbMATH Open Web Interface contents unavailable due to conflicting licenses.
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Rational Learning and Rational Expectations
1987Much recent work in the economics of information has stemmed from the observation that demand functions, and therefore prices, reflect agents’ private information. Given an adequate understanding of the relationship between private information and equilibrium prices, it is possible to infer some or all of the private information.
Margaret Bray, David M. Kreps
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Rational Choice and Rational Expectations
2017The theory of rational choice assumes that when people make decisions they do so in order to maximize their utility. In order to achieve this goal they ought to use all the information available and consider all the options available to select an optimal choice.
Tshilidzi Marwala, Evan Hurwitz
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Is it rational to have rational expectations?
Mind & Society, 2014In economics in situations where there is uncertainty one has to attribute some attitude to handling this uncertainty to individuals. The original idea was to assume that "people do not make systematic mistakes" for which Muth coined the term "rational expectations".
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2011
AbstractThis chapter first defines rational expectations, which is an extension to stochastic environments of the idea of perfect foresight. It characterizes the original Muth (1961) model, which exhibits how a number of results on the proliferation of shocks and stability are evaluated.
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AbstractThis chapter first defines rational expectations, which is an extension to stochastic environments of the idea of perfect foresight. It characterizes the original Muth (1961) model, which exhibits how a number of results on the proliferation of shocks and stability are evaluated.
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