Economists often assume that people are rational and forward-looking in their decisions. What is really meant by the terms "rational" and "forward-looking”? Give concrete examples of a decision in which people are likely to be rational and forward-looking and one in which this assumption seems less tenable. What empirical tests would you use to determine whether people are rational and forward-looking in a particular context or not?

Economists often assume that people are rational and forward-looking in their decisions. What is really meant by the terms "rational" and "forward-looking”? Give concrete examples of a decision in which people are likely to be rational and forward-looking and one in which this assumption seems less tenable. What empirical tests would you use to determine whether people are rational and forward-looking in a particular context or not?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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