O'Reilly logo

Beyond Mechanical Markets by Michael D. Goldberg, Roman Frydman

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

4

The Figment of the “Rational Market”

IN PROPOSING the Rational Expectations Hypothesis, Muth did not think of it as a normative hypothesis that individuals were omniscient or that they all thought alike. He also did not claim that the hypothesis presumes that every market participant must forecast according to the relevant economic theory: the Rational Expectations Hypothesis “does not assert that the scratch work of entrepreneurs resembles the system of equations [in an economist's model] in any way” (Muth, 1961, p. 317). Moreover, it does not imply “that predictions of [individuals] are perfect or that their expectations are all the same” (Muth, 1961, p. 317).

However, Muth held out the promise that one day economists would formulate a ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required