Subjective expectations in economics: a statistical overview of the main findings

Abstract

In this writing we provide a brief overview on how in different fields such as statistics, econometrics and experimental psychology, the issue of measuring subjective expectations about future uncertain outcomes has been attacked. In many situations realized observed data come from a decision process in which the decision is made by considering future uncertain outcomes, so that the observed data will depend on future outcome via the probabilistic judgement made by the decision maker. For example the decision to buy a car today will depend on our expectations about future incomes, so that observed data about the number of cars sold will depend on peoples’ expectations about their future incomes. Expectations are not observable so that we need proper statistical methods of inference to treat these type of problems. Here, we provide a very general overview, and we try to summarize different approaches.