Do Corporate Executives Have Rational Expectations?
AbstractThis article presents tests of rational expectations using the Profit Impact of Market Strategy survey of executives of large corporations. Unlike past surveys, the respondents have a financial interest in being accurate. Executives do not have rational expectations concerning output prices, input prices, wages, or product demand. For example, executives predicting price increases 5 percent above the average of other companies had actual price increases only about 0.5 percent above the mean. Executives' expectations also give too much weight to their own recent experience and do not use all available information. Expectations are difficult to predict; nevertheless, simple adaptive models do almost as well as more complicated specifications. Copyright 1993 by University of Chicago Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 66 (1993)
Issue (Month): 2 (April)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JB/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Theresa Lant & Zur Shapira, 2009. "Managerial Reasoning about Aspirations and Expectations," Discussion Paper Series dp498, The Center for the Study of Rationality, Hebrew University, Jerusalem.
- Wong, Shirly Siew-Ling & Puah, Chin-Hong & Shazali, Abu Mansor, 2011. "Survey Evidence on the Rationality of Business Expectations: Implications from the Malaysian Agricultural Sector," MPRA Paper 36661, University Library of Munich, Germany.
- Lant, Theresa & Shapira, Zur, 2008. "Managerial reasoning about aspirations and expectations," Journal of Economic Behavior & Organization, Elsevier, vol. 66(1), pages 60-73, April.
- David Neumark & Jonathan S. Leonard, 1992.
"Inflation Expectations and the Structural Shift in Aggregate Labor-Cost Determination in the 1980s,"
NBER Working Papers
4018, National Bureau of Economic Research, Inc.
- Neumark, David & Leonard, Jonathan S, 1993. "Inflation Expectations and the Structural Shift in Aggregate Labor-Cost Determination in the 1980s," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(4), pages 786-800, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.