Rational Expectations Quotes

I would reject the distinction between a Keynesian moment and a behavioral moment.

as an economics professor I am by nature inclined to the view that the truth isn't out there, it's in here - that usually you learn a lot more by thinking really hard about the data than you do by sniffing around for supposedly inside information.

Economists often like startling theorems, results which seem to run counter to conventional wisdom.

Lucas attended a conference on rational expectations at the University of Minnesota in the spring of 1973. The day after the conference, I received a call from Pittsburgh.

Economists who adhere to rational-expectations models of the world will never admit it, but a lot of what happens in markets is driven by pure stupidity - or, rather, inattention, misinformation about fundamentals, and an exaggerated focus on currently circulating stories.

I don't entirely reject the idea of efficient markets. It needs updating.

It is folly to expect men to do all that they may reasonably be expected to do.

Investing in a market where people believe in efficiency is like playing bridge with someone who has been told it doesn't do any good to look at the cards.

It seems to me that at least as far as the financial markets are concerned, there is increasing evidence against rational expectations, even at the macro level.

I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them.

The first and most optimistic response was complete rational expectations econometrics. A rational expectations equilibrium is a likelihood function. Maximize it.

Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets.

A lot of people have asked me whether I am a cynic or take a cynical view of politics and are often surprised when I say that I consider myself an optimist, but an optimist dressed in the robes of a realist.

The secret of contentment is never to allow yourself to want anything which reason tells you you haven't a chance of getting.

When you look at any experimental work not directly related to economics, but trying to test rational behavior in other ways, experiments have conspicuously failed to show rational behavior. Macro evidence certainly suggests deviations from rationality, but I don't want to say the rationality hypothesis is completely wrong. If you have any introspective idea or experimental idea about people's behavior, it seems to be incompatible with the really full scale rational expectations.

Market prices are always wrong in the sense that they present a biased view of the future.

In New Classical theory, periods of declining employment - business cycle downturns - may be caused by an unexpected decline in aggregate demand, which leaves workers mistakenly holding out for nominal wages that exceed the new market-clearing level.

Have rational expectations for future returns and avoid changing those expectations in response to the ephemeral noise coming from Wall Street.

The 1970s was the decade of developments in the new area of information economics. Search theory, which emphasized the need to gather information, was joined by models that featured asymmetric information, the case in which information differed across individual agents.

The goal...is not to change your desires and wishes but to persuade you to stop demanding that you absolutely must have what you wish-from yourself, from others, and from the world. You can by all means keep your wishes, preferences, and desires, but unless you prefer to remain needlessly anxious, not your grandiose demands.

If you believe that markets operate in Alan Greenspan fashion, then you don't inquire into the details.