Rational Expectations Theory

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In economics, a theory stating that economic actors make decisions based on their expectations for the future, which are based on their observations and past experiences. A basic example of rational expectations theory is a situation in which a consumer delays buying a certain good because, based on his/her observations and experiences, he/she believes that the price will be less expensive in a month. If enough consumers believe that, demand eases and the good is likely to actually be less expensive next month. Thus, the consumer waits a month before buying the good. Rational expectations theory states that current expectations strongly influence future performance. Economists disagree about how well the rational expectations theory works in the real world.

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Rational Expectations			But I look back with pride at the first three projects that I initiated: one on youth labor markets organized by Dick Freeman and David Wise, one on capital formation headed by Ben Friedman, and one on the implications of rational expectations theory for macroeconomic policy organized by Stan Fischer. Stepping down as NBER president by Feldstein, Martin / NBER Reporter Seizing upon so-called rational expectations theory, they argued that multi-year tax cuts would prompt investors to sink money into markets on the basis of an expectation of lower tax rates in the future. Bull pulpit: how the prosperous eighties came to be - and how we can ... by Dentzer, Susan / Washington Monthly Each relaxes the traditional rational expectations theory in a certain way. Behavioral Finance by NBER Reporter			Rating Agencies rating agency Rating Class Rating delle obbligazioni affidabilita finanziaria Rating Service Rating Trigger Ratings Ratio Ratio Analysis Ratio Calendar Combination Ratio Calendar Spread Ratio Covenant Ratio d'autonomie financiere Ratio de couverture Ratio de liquidite Ratio de liquidite generale Ratio de siniestros Ratio du service de la dette Ratio importations/consummation Ratio operativo Ratio Spread Ratio Strategy Ratio Writer Ratio Writing Rational Expectations Rational Expectations Theory Rational Number Rational pricing Rationalization ratl al-fiddah Ratl bil 'Ashyaa' raw land raw material Raw Material Supply Agreement Raymond Kroc Razionamento del capitale Razor-Razorblade Model RBC RE Re-Use Fee Reabilitacao do falido Reaccion Reachback Reaction Reactivacion economica Read the Tape Reader Response Readies Reading the Tape ready, willing, and able Reaffirmation			Rational Cognitive Behaviour Therapy Rational conformal field theory Rational curve Rational curve Rational Data Architect rational deductive diagnosis rational deductive diagnosis rational deductive diagnosis rational deductive diagnosis Rational Dog Training Rational drug design Rational Drug Therapy Program Rational economic actor Rational economic actor Rational economic actor Rational Economic Actors Rational economic man Rational Embedded Wavelet Image Coder Rational Emotive Behavior Therapy Rational Emotive Behavior Therapy Rational Emotive Education Rational Emotive Therapy Rational Emotive Therapy Rational Emotive Therapy Rational Emotive Therapy Rational equation Rational equation Rational Examination Association of Lincoln Land Rational expectations Rational Expectations Hypothesis Rational Expectations Theory Rational Expectations-Permanent Income Hypothesis Rational expression Rational expression rational faculty Rational field Rational field Rational field Rational field rational formula RATional Fortran Rational fraction Rational Free Form Deformation rational function rational function rational function Rational function field Rational function field Rational Functional Tester Rational functions Rational functions rational horizon rational horizon Rational Hybrid Monte Carlo Rational inference Rational inference Rational inference Rational inference Rational integer Rational integer Rational integer

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