Since its adoption, well-anchored inflation expectations have allowed businesses, individuals and families to take a longer view in their planning, which has led to a better allocation of economic and financial resources and a more stable economy overall. Decision making and expectation formation So we know that expectations are crucial, but what do we know about how they are formed?
Trying to understand better how we think is a timeless quest, spanning numerous disciplines such as philosophy, psychology, biology, neuroscience and political science, as well as economics. These all offer different perspectives and the picture that emerges confirms in some ways the obvious: decision making is an extremely complex process.