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Adaptive Expectations

   Also found in: Wikipedia 0.01 sec.
Adaptive Expectations
A theory stating that economic actors make decisions based upon past, recent performance, regardless of the actual state of the economy. Thus, it takes economic actors some time to realize that a recession has ended or is beginning and to adjust their behavior accordingly. Adaptive expectations can result in large losses. See also: Rational expectations, Irrational exuberance.


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Adaptive expectations Subjective well-being research based on panel data also has demonstrated that individuals are able to adapt expectations to life events and circumstances.
Specifically, the traditional Phillips curve as suggested by Hibbs (1977) is built on adaptive expectations and economic constraints.
I investigate one assumption with respect to how investors determine their exchange rate expectations: adaptive expectations.
 
 
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