There are valid theoretical and empirical arguments against the rational expectations hypothesis
the verdict
SUPPORTED
the evidence backs this
confidence 75/100
Substantial theoretical and empirical work demonstrates that relaxing the assumption of rational expectations in favor of bounded rationality or behavioral models better accounts for real-world market dynamics, cognitive biases, and economic anomalies.
Evidence for · 3
Agentic Finance: An Adaptive Inference Framework for Bounded-Rational Investing Agents.
2026 · cited by 0
Demonstrates that adaptive inference models using bounded-rational agents outperform strict classical rationality/valuation assumptions under uncertainty.
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More for · 2
Decision-making of construction workers' waste reduction behavior: a study based on Cost-Benefit Theory and Cumulative Prospect Theory.
2025 · cited by 0
Integrates Cumulative Prospect Theory to model cognitive biases and departures from standard rational choice in economic decision-making.
Bounded strategic reasoning explains crisis emergence in multi-agent market games.
2023 · cited by 0
Critiques the rational expectations and efficient market hypothesis for failing to model out-of-equilibrium dynamics, proposing bounded rationality as a superior explanation for market crises.