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The Rational Expectations Hypothesis: Theoretical Critique

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  • Tomáš Frömmel

Abstract

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.

Suggested Citation

  • Tomáš Frömmel, 2017. "The Rational Expectations Hypothesis: Theoretical Critique," E-LOGOS, Prague University of Economics and Business, vol. 2017(2), pages 4-12.
    • Handle: RePEc:prg:jnlelg:v:2017:y:2017:i:2:id:443:p:4-12
    DOI: 10.18267/j.e-logos.443
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    References listed on IDEAS

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