Working Paper

Expectational coordination failures and Market outcomes’ volatility

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The first part of this text comes back on the standard economic viewpoint on expectational coordination, a viewpoint that the recent events have challenged.

The second part reviews the existing directions for a critical assessment of the rational expectations hypothesis. The third part shows how such a critical assessment, along the lines of the so- called “eductive” learning approach, radically modifies our view of three key problems : the economic benefit of speculation, the informational efficiency of markets and, last but not least, the ability of long horizon agents to anticipate the future. The fourth part stresses the established basis as well as the future challenges of the discussed lines of thinking.