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Adaptive expectations

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Suppose you flipped an honest coin 10 times and heads came up 8 times. You are about to toss the coin another 10 times. Using adaptive expectations, how many heads do you expect? Based on rational expectations, how many heads do you expect?

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Solution Summary

Adaptive expectations are demonstrated. How many heads are expected for adaptive expectations are determined.

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Adaptive expectations means that people form their expectations about what will happen in the future based on what has ...

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  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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