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Antonio Palestrini and Mauro Gallegati
''Unbiased Adaptive Expectation Schemes''
( 2015, Vol. 35 No.2 )
There are situations in which the old-fashioned adaptive expectation process seems to provide a good description of agents' behavior (Chow, 2011). Unfortunately, this expectation scheme may not satisfy the necessary rationality condition (unconditional mean-zero error). This paper shows how to simply fix the problem introducing a bias correction term.
Keywords: Adaptive expectations, unbiased errors.
JEL: D8 - Information, Knowledge, and Uncertainty: General
C2 - Single Equation Models; Single Variables: General
Manuscript Received : Jun 30 2014 Manuscript Accepted : May 14 2015

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