Rational expectations assumes perfect, model consistency between beliefs and market realizations. Here we discuss behaviorally rational expectations, characterized by an observable, parsimonious and intuitive form of consistency between beliefs and realizations. We discuss three case-studies....

In experiments which measure subjects' beliefs, both beliefs about others' behavior and beliefs about others' beliefs, are often correlated with a subject's own choices. Such phenomena have been interpreted as evidence of a causal relationship between beliefs and behavior. An alternative...