Biased expectations theory is an attempt to explain why the yield curve usually slopes upward in terms of investor preferences. Two common biased expectation theories are the liquidity preference ...

Rational expectations are a very special example of recursive expectations, and do not necessarily reflect reality. Numerous adjustments have been made to bring rational expectations hypothesis closer ...

Unbiased Expectations Theory states that current long-term interest rates contain an implicit prediction of future short term interest rates. More specifically, ...

However, the actual theory of rational expectations was proposed by John F. Muth in his seminal paper, “Rational Expectations and the Theory of Price Movements,” published in 1961 in the ...

Rational expectations is a basic economic theory that originated with a paper written in 1972 by future Nobel Prize-winning economist Robert Lucas. The theory of rational expectations has been ...

The Nobel laureate and longtime University of Chicago economist deepened understanding of economic policy through his rational expectations hypothesis.