[EMAIL PROTECTED] wrote:
>
> In a message dated 11/10/02 8:41:23 PM, [EMAIL PROTECTED] writes:
>
> << There is a difference between ignorance and irrationality - that is the
> central point of this literature
> really. >>
>
> Yes. Somewhere along the line someone--either the most ardents adherents or
> the most disingenuous opponents--has defined "rational expectations" as
> meaning that people are perfect prognosticators, omnicient not only about
> past conditions, but about future conditons as well. Under the definition
> nobody has "rational expectations."
This is pure caricature. RE does not say that people are perfect or
omniscient. It just says that they are right on average, that their
over-estimates balance out their under-estimates.
RE is often empirically false, but not in the trivial way you're saying.
--
Prof. Bryan Caplan
Department of Economics George Mason University
http://www.bcaplan.com [EMAIL PROTECTED]
"He wrote a letter, but did not post it because he felt that no one
would have understood what he wanted to say, and besides it was not
necessary that anyone but himself should understand it."
Leo Tolstoy, *The Cossacks*
