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because life's like chocolate cake: it's only either very sweet or bittersweet

Saturday, November 26, 2005

Rational Expectations

I have a hard time unexpecting the expected. When something has been proven right over and over and over again, I think this kind of reaction happens. Although the economic theory of adapative expectations states that it is inaccurate for one to base one's decisions on past events since this time around it may be a totally different situation (essentially something to that effect, only said more in a more technical and boring manner), I am not a follower of the thought. I end up making decisions by basing them on historical facts.

After the first paragraph, it would appear contradictory when I say that I usually get disappointed because of this mindset. It's because in truth I want things to be different, to not follow the trend...for history not to repeat itself. So I result to lowering my expectations. It works well for the following simple reasons:

1) You don't anticipate
2) The less you anticipate, the lower the probability for disappointment
3) The lower the probability for disappointment, the lower the probability of getting hurt
4) The lower the probability of getting hurt, the higher the probability for having a mind at peace and unbothered

A clear inverse relationship among the variables. With a significant effect on the lefthand side of the equation. Achieving the required efficiency. Plus the extra bit of utility you receive when you don't expect something nice to happen but it does.

Whoever said economics isn't a true social science is nuts.

4 Comments:

Anonymous Anonymous said...

hey...

nice blog :)

3:53 AM  
Blogger (in)communicative said...

Expectations are the root causes of all evil.

4:56 AM  
Anonymous Anonymous said...

can you hope without expecting?

11:03 AM  
Blogger stella said...

no mace, i don't think so. but i think you can expect without hoping.

8:29 AM  

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