This book concludes by summarizing the key arguments in the form of a comparison of the HRL formulation with the rational expectations hypothesis (REH). It explains what makes Maurice Allais's contribution original, important, and modern. To start with, many of the rational expectations theorists' criticisms of standard adaptive expectations do not apply to the HRL formulation. The HRL formulation is much more sophisticated and much more rational than the standard adaptive expectations model tolerated by the REH advocates when economic variables are interdependent. Furthermore, the variability of the rate of memory decay is endogenous both to economic agents and to the environment they are responding to. Parsimony, nonlinearity and time variability of the gain, unequal weighting of past observations according to a well-specified and stable law of forgetting, absence of patterns in forecasting errors—these are the features that make Allais's HRL formulation worth the consideration of economists wishing to explore or to revisit the unsettled and important question of “expectations” formation.
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