E-LOGOS 2017, 24(2):4-12 | DOI: 10.18267/j.e-logos.443

The Rational Expectations Hypothesis: Theoretical Critique

Tomá¹ Frömmel
Department of Economics, University of Economics Prague

Keywords: Expectations, rational expectations, adaptive expectations, mixed expectations, rationality, information, knowledge.

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.

Published: September 30, 2017  Show citation

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Frömmel, T. (2017). The Rational Expectations Hypothesis: Theoretical Critique. E-LOGOS, 24(2), 4-12. doi: 10.18267/j.e-logos.443
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