Business & Economics
The rational expectations hypothesis (REH) has long served as a foundation in macroeconomic laws of motion. However, the assumptions of REH are likely too powerful to be representative of economic actors. This research evaluates adaptive learning, a developing alternative to rational expectations, using a multi-agent macroeconomic prediction “game.” Data was gathered from a group of students, each predicting the outcome of a single economy over time. Each agent was asked to forecast output (GDP) and inflation in each period based on historic levels of output, inflation, and interest rates. These data were then analyzed under various theoretical models of adaptive learning for mathematical fit.
Martin, David, "An Experimental Analysis of Adaptive Learning in a Multi-Subject Economy" (2015). Business and Economics Honors Papers. 4.