The major criticism of the view that expectations are formed adaptively is that ________.
A) this view ignores the fact that people use more information than just past data to form their expectations
B) it is easier to model adaptive expectations than it is to model rational expectations
C) adaptive expectations models have no predictive power
D) people are irrational and therefore never learn from past mistakes

Question

Quizplus · Accepted Answer

The major criticism of the view that expectations are formed adaptively is that this view ignores the fact that people use more information than just past data to form their expectations. This criticism suggests that people also use current information and expectations about future events to form their expectations, which is not accounted for in adaptive expectations models.

The Major Criticism of the View That Expectations Are Formed