Different theories of expectation formation and learning usually yield different outcomes for realized market prices in … dynamic models. The purpose of this paper is to investigate expectation formation and learning in a controlled experimental … measured by the variance is significantly larger than the amplitude under RE, implying persistent excess volatility. However …

This paper develops a theory of expectations-driven business cycles based on learning. Agents have incomplete knowledge … consumption and leisure. Output volatility is comparable with a rational expectations analysis with a standard deviation of … technology shock that is 20 percent smaller, and has substantially more volatility in investment and hours. Persistence in these …