Good link, Eric. On the other hand, if you had just quoted this paragraph:
The concept of rational expectations asserts that outcomes do not differ systematically (i.e., regularly or predictably) from what people expected them to be. The concept is motivated by the same thinking that led Abraham Lincoln to assert, "You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time." From the viewpoint of the rational expectations doctrine, Lincoln's statement gets things right. It does not deny that people often make forecasting errors, but it does suggest that errors will not persistently occur on one side or the other. --- I would have preferred it, and not looked it up myself -- but would have missed the fine link. Then the question about "irrational behavior" becomes more focussed on that which is regular or predictable. At which time, I have a big preference for "general ideas" to be illustrated by at least one concrete, perhaps hypothetical, example. Thanks, Tom Grey -----Original Message----- From: Eric Crampton [mailto:ecrampto@;gmu.edu] Check Sargent's short piece on rational expectations for a primer: http://www.econlib.org/library/Enc/RationalExpectations.html
