The adaptive learning approach has been fruitfully employed to model the formation of aggregate expectations at the … macroeconomic level, as an alternative to rational expectations. This paper uses adaptive learning to understand, instead, the … formation of expectations at the micro-level, by focusing on individual expectations and, in particular, trying to account for …

infinite-horizon learning, and subjective expectations with Euler-equation learning. Under rational expectations, the model … sensitive to the modeling of expectations, and they highlight learning as a key behavioral feature to understand macroeconomic …. We investigate the model under different expectational assumptions: rational expectations, subjective expectations with …

We estimate a Heterogeneous-Agent New Keynesian model with sticky household expectations that matches existing …

Agents forming adaptive expectations generally make systematic mistakes. This characterization has fostered the … rejection of adaptive expectations in macroeconomics. Experimental evidence, however, shows that in complex environments human … subjects frequently rely on adaptive heuristics – model-consistent expectations being simply too difficult or impossible to …

rational private sector expectations about housing prices and inflation, optimal monetary policy can be characterized by a … policymaker is concerned with potential departures of private sector expectations from rational ones and seeks a policy that is …

expectations under different policy counterfactuals. We express the consumption of non-hand-to-mouth households as a function of … expectations only and elicit all expectations appearing in the consumption functions for alternative policy scenarios with tailored … surveys. Feeding these individual-level expectations into the model illustrates that a modest forward guidance statement in …

We derive the optimal monetary policy in a sticky price model when private agents follow adaptive learning. We show … intertemporal trade-off, not present under rational expectations: it is optimal to forego stabilizing the economy in the present in … order to facilitate private sector learning and thus ease the future intratemporal inflation-output gap trade-offs. The …

This paper estimates a New Keynesian model extended to include heterogeneous expectations, to revisit the evidence that … 1980s. Different shares of consumers and firms form either rational expectations, or adaptive and extrapolative … expectations. The inclusion of heterogeneous expectations alters the determinacy properties of the model compared to the …

Motivated by the observation that survey expectations of stock returns are inconsistent with rational return … expectations under real-world probabilities, we investigate whether alternative expectations hypotheses entertained in the asset … about future returns, instead often display overly optimistic return expectations. We speculate as to what kind of …