Adaptive expectations

Adaptive expectations,

Definition of Adaptive expectations:

  1. The theory that behaviour changes because of what people expect will happen: so workers ask for more pay because they believe inflation will rise, and this increase in pay actually fuels an increase in inflation; similarly economists will exaggerate their inflation forecasts to take into account errors they made in previous forecasts. Such adaptive expectations always exaggerate upward or downward trends.

Meaning of Adaptive expectations & Adaptive expectations Definition