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In the early 1970s,... economists began to embrace the Rational Expectations Hypothesis , according to which market participants’ expectations are “essentially the same as the predictions of the relevant economic theory” . What has been largely overlooked is that, … REH theorists presume that the role of market participants’ expectations in driving outcomes is not autonomous from the other components of the model. … Because REH models, by design, rule out an autonomous role for expectations, they are best viewed as derailing, rather than developing, the microfoundations approach. (en) |
