sethi:
" it is not enough to simply allow for belief heterogeneity; one must also confront the question of how the distribution of (mutually inconsistent) beliefs changes over time."
he quotes woody oakford
"The macroeconomics of the future... will have to go beyond conventional late-twentieth-century methodology... "
indeed wody !
woody imperative:
"make the formation and revision of expectations an object of analysis in its own right"
" rather than treating this as..."
get a load of the gang buster move comin'
" ...something that should already be uniquely determined
once the other elements of an economic model (specifications of preferences, technology, market structure, and government policies) have been settled.'
RS's own first cut:
" ... I would argue that the belief distribution evolves based on differential profitability: successful beliefs proliferate, regardless of whether those holding them were broadly correct or just extremely fortunate."
" This has to be combined with the possibility that some individuals will invest considerable time and effort and bear significant risk to profit from large mismatches between the existing belief distribution and the objective distribution to which it gives rise. Such contrarian actions may be spectacular successes or miserable failures, but must be accounted for in any theory of expectations that is rich enough to be worthy of the name."
