On the nature of expectations
Bibliographic Data
| ID | 9619258 |
|---|---|
| Authors | Nigel Harvey (0000-0002-9246-1992, University College London, corresponding author), Fergus Bolger (0000-0001-8812-2157, University College London), Alastair Mcclelland (0000-0001-8714-9040, University College London) |
| Year | 1994 |
| Volume | 85 |
| Issue | 2 |
| Pages | 203-229 |
| Publication date | 1994-05-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | British Journal of Psychology (JOURNAL) |
| Journal identifiers | ISSN: 0007-1269 • E-ISSN: 2044-8295 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/j.2044-8295.1994.tb02519.x |
| OpenAlex | W2048643386 |
| Language | EN |
| Citations received | 5 |
We review economic and psychological models of expectation formation. According to the rational model, expectations are optimal; according to the adaptive model, they minimize previous error; according to the extrapolative model, they continue a trend. In an experiment, we asked subjects to make forecasts from previous data in the same series or from previous data in a different but related series. We also asked them to estimate the probability that their forecasts would be correct. The rational model failed because within‐series forecasts were too poor, cross‐series forecasts were biased, and probability estimates showed overconfidence. Regression analyses and a lack of performance improvement showed that the adaptive model was inappropriate. Instead, within‐series forecasts were made by extrapolation and cross‐series forecasts appeared to be based on a faulty conditional rule
Adaptive expectations · Conditional expectation · Consensus forecast · Econometrics · Economics · Extrapolation · Overconfidence effect · Rational expectations · Scoring rule · Series (stratigraphy) · Statistics · Forecasting Techniques and Applications · Mathematics · Psychology · Social Psychology
| Unique citing works | 5 |
|---|---|
| Citations per year | 0,19 |
| Citation span | 1999 - 2021 (23) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 4 |