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Expectations in Experiments


  • Florian Wagener

    (CeNDEF, Department of Economics and Econometrics, University of Amsterdam, 1018 XE Amsterdam, and Tinbergen Institute, 1082 MS Amsterdam, The Netherlands)


The rational expectations hypothesis is one of the cornerstones of current economic theorizing. This review discusses a number of experiments that focus on expectation formation by human subjects in a number of learning-to-forecast experiments and analyzes the implications for the rational expectations hypothesis. In these experiments, most agents are rational in an operational sense, and their expectations coordinate quickly, but not necessarily on the rational expectations value. In several situations, the homogeneous rational expectations hypothesis of Lucas and Prescott poorly describes the expectational dynamics and is outperformed by other hypotheses. But even in those situations in which the hypothesis gives a good description, it is more likely that coordination on rational values is brought about by the institutional structure of the market rather than the rationality of the agents.

Suggested Citation

  • Florian Wagener, 2014. "Expectations in Experiments," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 421-443, August.
  • Handle: RePEc:anr:reveco:v:6:y:2014:p:421-443

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    Cited by:

    1. Le Van, Cuong & Navrouzoglou, Paulina & Vailakis, Yiannis, 2019. "On endogenous formation of price expectations," Games and Economic Behavior, Elsevier, vol. 115(C), pages 436-458.

    More about this item


    rational expectations; expectation formation; laboratory experiments; human subjects;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations


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