Rational expectations are based on the past alone,while adaptive expectations are based on the past,the present,and the future.

Question

Quizplus · Accepted Answer

Rational expectations take into account all available information, including expectations about future events. Adaptive expectations, on the other hand, update based on past data and current information, but do not necessarily incorporate expectations about the future.

Rational Expectations Are Based on the Past Alone,while Adaptive Expectations