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...