Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2013-08-29 Number: 13-125/II Author-Name: Florian Wagener Author-Workplace-Name: CeNDEF, University of Amsterdam Title: Expectations in Experiments Abstract: This discussion paper resulted in a publication in 'Annual Review of Economics', 2014, 6, 421-443.
The rational expectations hypothesis is one of the cornerstones of current economic theorising. This review discusses a number of experiments that focus on expectation formation by human subjects and analyses the implications for the rational expectations hypothesis. The experiments show that most agents are weakly rational and that their expectations coordinate quickly; but the strong rational expectations hypothesis poorly describes the expectational dynamics and is outperformed by other hypotheses. Classification-JEL: D84 Keywords: Rational expectations, expectation formation, laboratory experiments, human subjects File-Url: http://papers.tinbergen.nl/13125.pdf File-Format: application/pdf File-Size: 266287 bytes Handle: RePEc:tin:wpaper:20130125