The formation of conventional expectations under strong uncertainty: a comment

Purpose - This paper comments on Theodore Koutsobinas's recent contribution to the debate on the formation of expectations in situations of strong uncertainty. Design/methodology/approach - The set of comments focuses not on doctrinal‐historical issues, but on Koutsobinas's theoretical framework, which is, in turn, a modified version of the analytical scheme of the state of expectations presented in the present author's 1999 article in theJournal of Post Keynesian Economics. Findings - The paper demonstrates that the original framework developed in the 1999 “Expectations and confidence” article is general enough to accommodate Koutsobinas's concern with conventional expectations. It also shows that some ways of using that framework to discuss conventions have already been explored in subsequent work. The interesting points made by Professor Koutsobinas can thus be investigated with the original framework, without the changes he suggests. Originality/value - The paper clarifies some elements of the theory of expectations and confidence formation and its use to study conventional and unconventional behaviour.