Forum Archive Index - March 2004

["david.gibson" <david.gibson@k.co.nz>]

Found a really great quote in the following paper:

 

http://arxiv.org/abs/cond-mat/0209065

 

"Individuals with rational expectations predict others’ behavior by focusing on their external incentives and constraints.  In contrast, individuals with adaptive expectations predict others’ behavior (including possibly the behavior of such an abstract "other" as the stock market) by extrapolating from the past".

I posit that this is a fundamental definition of FA and TA?  (An the basic reason why the two approaches will never be reconciled).

/dbg