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Overcoming Bias Commenter's avatar

I am not sure why disagreements over inflation expectations should indicate bias, unless one is a true believer in rational expectations. But even with that, one can believe that the market as a whole exhibits ratex, even while there might be a distribution of individual expectations around that rational core.

For that matter, the ratex forecast can be wrong, indeed always wrong. So, who is biased? The person who makes the correct forecast or the person who makes the incorrect but rationally expected forecast?

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Robin Hanson's avatar

I didn't mean to imply we had no idea what others expect about inflation. I meant that our uncertainty about the beliefs of others is probably about the same magnitude as the variance in beliefs across people.

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