Adaptive Expectations Theory

The video discusses how people adjust their expectations for the future based on recent past events or real-time data, closely related to the rational expectation theory. It explains the three-factor process of identifying available information, past experiences, and applying human reasoning. The adaptive expectation hypothesis expands on this by including immediate history or real-time data, affecting behavior in organizations.

What is the primary basis for adjusting expectations according to the theory discussed?

• Recent past events or real-time data

• Hypothetical scenarios

• Future predictions

• Long-term historical data

Which theory is closely related to the concept of adjusting expectations based on past information?

• Prospect Theory

• Game Theory

• Behavioral Economics Theory

• Rational Expectation Theory

What is the first step in the three-factor process of forming expectations?

• Identifying past experiences

• Predicting future outcomes

• Applying human reasoning

• Identifying available information

How does the adaptive expectation hypothesis differ from the rational expectation theory?

• It focuses solely on future predictions

• It includes immediate history or real-time data

• It relies on hypothetical scenarios

• It ignores past experiences

What impact does the adaptive expectation hypothesis have on organizational behavior?

• It focuses on long-term planning

• It stabilizes organizational processes

• It leads to constant adaptation of expectations

• It eliminates the need for data analysis