Towards bounded rationality within rational expectations — some comments from an economic point of view

Lutz Beinsen

Ulrike Leopold-Wildburger

pp. 141-152

in: Werner Leinfellner, Eckehart Köhler (eds), Game theory, experience, rationality, Berlin, Springer, 1998

Abstract

Rationality has been a principle widely assumed in economics from early on. In contrast, rationality in the formation of economic expectations is rather new. Since the term "rational expectations" has meanwhile become a kind of slogan for diverse issues in economics as in related fields, there is some danger of authors' not always being aware of the true meaning of this technical term. Sometimes it is used, in a context where expectation formation about uncertain events is essential, as if rational expectations solved this fundamental problem.