JOURNAL OF FINANCE & CORPORATE GOVERNANCE
Volume 1, Numéro 2, Pages 45-51

The True Meaning Behind The Stochastic Hypothesis Which Assert That E(ε)=0 ?

Authors : Djeddi Tarek . Brika Said . Haidouchi Achour .

Abstract

The aim of this Paper is to examine the meaning about the classical hypothesis which claim that the error of expectation equal zero, by mentioning all theories of expectations before and after the REH. The rational expectations paradigm has dominated the field of economics ever since it was introduced some fifty years ago. Recently research in heterogeneous expectations, bounded rationality, and models of learning have gained leverage, and focus has shifted away from the rational expectations hypothesis. Despite these developments over the past few decades, the rational expectations paradigm is still very much the standard way of handling uncertainty in economic theory, and often the rationality assumption is not seriously questioned.

Keywords

Rational Expectations, errors, learning model