This paper explores why expectations elicited from corporate decision-makers may fall short of the rational expectations ideal: the formation of an informed forecast may just not be part of the optimal management of uncertainty. The analysis of an investment decision shows that when forecasting...

This paper states that the strong biases found in survey expectations do not necessarily distort economic decisions. An econometric analysis of price and profit data suggests that Swiss manufacturers do not base their production decisions on the forecasts they supply to the surveying...

We study the historical trends in the coverage of the related topics growth and stability in the field of macroeconomics. It is argued that over the past 25 years research on growth has quantitatively dominated research on output variability. The article seeks to make a contribution to an...

We investigate how banks’ boundedly rational learning influences their views about default risks over the business cycle. Our analysis details the direction and the magnitude of these effects assuming that banks update probability in a Bayesian way. With a limited experience span lenders are...

This book offers a broad perspective on the economics of expectations. Experimental studies are used to analyse how human bounded rationality affects economic performance. The challenges posed for policy making are also addressed.