First proposed by John Muth, for 10 points, name this economic assumption which requires accounting for market actors' knowledge of policy when attempting to influence the economy.
Robert Hall's imposition of it on the permanent income theory implies that consumption is a random walk, and this idea is a building block for the theory of "tax smoothing." John Maynard Keynes provided an early version of this theory by discussing the "waves of optimism and pessimism" that determine economic activities, and an example of this theory in practice is the fact that stock prices depend in part on what prospective buyers and sellers believe the price will be in the future. First proposed by John Muth, for 10 points, name this economic assumption which requires accounting for market actors' knowledge of policy when attempting to influence the economy.
Robert Hall's imposition of it on the permanent income theory implies that consumption is a random walk, and this idea is a building block for the theory of "tax smoothing."
rational expectations theory