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Economic Analysis: Theory and Practice
 

Self-organization of expectations with bounded rationality as a mechanism for economic systems self-development

Vol. 13, Iss. 33, SEPTEMBER 2014

Available online: 30 August 2014

Subject Heading: ECONOMIC AND MATHEMATICAL MODELING

JEL Classification: 

Pages: 49-55

Serkov L.A. Ural Institute of Business, Yekaterinburg, Russian Federation
dsge2012e@mail.ru

The article addresses various mechanisms of economic agents' expectations formation. The author considers the formation of expectations on the basis of adaptive learning as one of the mechanisms for continual self-organization of expectation of economic agents at the microeconomic level. The self-evolution of this process determines the evolution of the economic system. The neo-classical model studies this self-evolution as a process of convergence of expectations with bounded rationality to the rational expectations equilibrium. The author shows that the key factor influencing the convergence is price flexibility.

Keywords: self-organization, self-evolution, adaptive, expectations, rational expectations, adaptive learning

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