Adaptive expectations is a theory that states individuals adjust their expectations of the future based on past events. This approach to predicting future events implies that people base their expectations on what happened in the recent past and modify them incrementally as new information arises.
Views of the future that inform consumer, investor, business, and government decisions. Various factors can affect expectations and thereby impact the value of financial assets and business entities.
Rational expectations refer to the hypothesis in economics that individuals make decisions based on their best available information, forecasting future economic variables as accurately as possible.
