Theory of adaptive expectations

Theory of adaptive expectations,

Definition of Theory of adaptive expectations:

  1. Economic-behavior observation that people form their expectations of economic trends solely on the basis of what was the past magnitude and direction of those trends. If these expectations turn out to be wrong then, depending on the degree of the error, people revise (adapt) their future estimates accordingly. See also theory of rational expectations.

Meaning of Theory of adaptive expectations & Theory of adaptive expectations Definition