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Learning to Become Rational

The Case of Self-Referential Autoregressive and Non-Stationary Models

  • Book
  • © 1996

Overview

Authors:
  1. Markus Zenner

    1. Institute for Econometrics and Operations Research, University of Bonn, Bonn, Germany

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Part of the book series: Lecture Notes in Economics and Mathematical Systems (LNE, volume 439)

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Table of contents (6 chapters)

  1. Front Matter

    Pages N1-vii
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  2. Introduction

    • Markus Zenner
    Pages 1-27

  3. Univariate AR(1) Models

    • Markus Zenner
    Pages 29-74

  4. Univariate ARX Models

    • Markus Zenner
    Pages 75-112

  5. Univariate Non-Stationary Models

    • Markus Zenner
    Pages 113-141

  6. Multivariate ARX Models

    • Markus Zenner
    Pages 143-159

  7. Multivariate Non-Stationary Models

    • Markus Zenner
    Pages 161-168

  8. Back Matter

    Pages 169-205
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Keywords

About this book

1. 1 Rational Expectations and Learning to Become Rational A characteristic feature of dynamic economic models is that, if future states of the economy are uncertain, the expectations of agents mat­ ter. Producers have to decide today which amount of a good they will produce not knowing what demand will be tomorrow. Consumers have to decide what they spend for consumption today not knowing what prices will prevail tomorrow. Adopting the neo-classical point of view that economic agents are 'rational' in the sense that they behave in their own best interest given their expectations about future states of the ecomomy it is usually assumed that agents are Bayesian deci­ sion makers. But, as LUCAS points out, there remains an element of indeterminacy: Unfortunately, the general hypothesis that economic agents are Bayesian decision makers has, in many applications, lit­ tle empirical content: without some way of infering what an agent's subjective view of the future is, this hypothesis is of no help in understanding his behavior. Even psychotic behavior can be (and today, is) understood as "rational", given a sufficiently abnormal view of relevant probabili­ ties. To practice economics, we need some way (short of psychoanalysis, one hopes) of understanding which decision problem agents are solving. (LucAs (1977, p. 15)) 2 CHAPTER 1. INTRODUCTION 1. 1.

Authors and Affiliations

  • Institute for Econometrics and Operations Research, University of Bonn, Bonn, Germany

    Markus Zenner

Bibliographic Information

  • Book Title: Learning to Become Rational

  • Book Subtitle: The Case of Self-Referential Autoregressive and Non-Stationary Models

  • Authors: Markus Zenner

  • Series Title: Lecture Notes in Economics and Mathematical Systems

  • DOI: https://doi.org/10.1007/978-3-642-51876-8

  • Publisher: Springer Berlin, Heidelberg

  • eBook Packages: Springer Book Archive

  • Copyright Information: Springer-Verlag Berlin Heidelberg 1996

  • Softcover ISBN: 978-3-540-61279-7Published: 12 July 1996

  • eBook ISBN: 978-3-642-51876-8Published: 09 November 2013

  • Series ISSN: 0075-8442

  • Series E-ISSN: 2196-9957

  • Edition Number: 1

  • Number of Pages: VII, 205

  • Topics: Economic Theory/Quantitative Economics/Mathematical Methods

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