Measuring expectations

Charles Manski*

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

634 Scopus citations

Abstract

To predict choice behavior, the standard practice of economists has been to infer decision processes from data on observed choices. When decision makers act with partial information, economists typically assume that persons form probabilistic expectations for unknown quantities and maximize expected utility. Observed choices may be consistent with many alternative specifications of preferences and expectations, so researchers commonly assume particular sorts of expectations. It would be better to measure expectations in the form called for by modern economic theory; that is, subjective probabilities. Data on expectations can be used to relax or validate assumptions about expectations. Since the early 1990's, economists have increasingly undertaken to elicit from survey respondents probabilistic expectations of significant personal events. This article discusses the history underlying the new literature, describes some of what has been learned thus far, and looks ahead towards making further progress.

Original languageEnglish (US)
Pages (from-to)1329-1376
Number of pages48
JournalEconometrica
Volume72
Issue number5
DOIs
StatePublished - Sep 1 2004

Keywords

  • Beliefs
  • Choice analysis
  • Subjective probabilities
  • Survey research

ASJC Scopus subject areas

  • Economics and Econometrics

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