Overreaction in Macroeconomics and Diagnostic Expectations - Andrei Shleifer

June 2022, Paper: "Dynamic macroeconomics is one of the great accomplishments of 20th century social science. It recognizes the centrality of forward-looking behavior for investment, consumption, and other major decisions of consumers and firms. The bedrock assumption of this research program is that expectations are “rational,” meaning that decision makers make optimal use of available information when making their forecasts. Indeed, this research program is often referred to as the “rational expectations revolution”." 

Non-HKS Harvard Faculty Author - Andrei Shleifer