Expectational coordination failures and Market outcomes' volatility
AbstractThe first part of this text reviews the standard economic viewpoint on expectational coordination, a viewpoint that the recent events have challenged. The second part reviews different existing directions assessments of the rational expectations hypothesis that have been made to-date. The third part shows how such a critical assessment, along the lines of the so-called "eductive" learning approach, radically modifies our view of three key problems : the economic role of speculation, the informational efficiency of markets and, last but not least, the ability of agents with long horizon to anticipate the future. The fourth part stresses what has been achieved so far well as the future challenges of the approaches advocated in this paper.
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Date of creation: Jun 2011
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expectational coordination ; rational expectations hypothesis;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-02 (All new papers)
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