The heterogeneous expectationshypothesis: Some evidence from the lab

by Cars H. Hommes

Journal of Economic Dynamics and Control Volume 35, Issue 1, January 2011, Pages 1–24


This paper surveys learning-to-forecast experiments (LtFEs) with human subjects to test theories of expectations and learning. Subjects must repeatedly forecast a market price, whose realization is an aggregation of individual expectations. Emphasis is given to how individual forecasting rules interact at the micro-level and which structure they cocreate at the aggregate, macro-level. In particular, we focus on the question wether the evidence from laboratory experiments is consistent with heterogeneous expectations.