A Short History in Defence of Adaptive Learning

This paper tells the story of adaptive learning. With origins in the rational expectations revolution, models
of adaptive learning are as much about moving people’s expectations closer to rational expectations as
further away. But relaxing the rational expectations requirement that subjective expectations are model
consistent permits addressing a broader class of economic questions as well as resolving certain
empirical puzzles. Importantly, models of optimal intertemporal decision making with adaptive learning
are supported by a growing body of empirical evidence using surveys of professional, household, firm
and policymaker forecasts.