Rational expectations is a basic economic theory that originated with a paper written in 1972 by future Nobel Prize-winning economist Robert Lucas. The theory of rational expectations has been ...

Rational Expectations' is a problematic theory in economics. Here I want to focus more away from economics; and more on the meanings of 'rationality' in decision-making, than on the problematic ...

Enter rational expectations theory, an idea first introduced by economist John Muth in the 1960s and later popularized by Robert Lucas. It challenged earlier economic theories by advocating that ...

Numerous polls have shown investor sentiment to be highly bullish. That brings us to the principle of rational expectations – an economic theory that suggests individuals make decisions based on ...

But why does this happen, and how do rational expectations lead us into a bubble-filled frenzy? This article unpacks the nuances of overvaluation by focusing on three key components – the herd ...

A medium-scale DSGE model with adaptive learning, estimated during 1965-2022, has a time-varying solution that produces lower forecast errors for inflation than a variant with rational expectations.