Theory of expectations

Theory of expectations is a concept that explains how people form expectations about the future based on their past experiences and the experiences of others. It posits that people use their past experiences to form predictions and expectations about their future outcomes. This theory has been used to explain a variety of behaviors, including how people make financial decisions, how they form political opinions, and even how they choose romantic partners.

The theory of expectations is based on the idea that individuals have a cognitive representation of the world that is based on their past experiences. This representation is a "mental model" which is used to form expectations about the future. People use this mental model to make predictions about their future outcomes, such as what kind of job they will have, what kind of relationship they will have, or what kind of financial decisions they will make.

The theory of expectations can be broken down into three main components:

• The first component is the mental model, which is the individual's representation of the world based on their past experiences. This is used to form expectations about the future.
• The second component is the expectation itself, which is the prediction or belief that the individual has about the outcome of their future experience.
• The third component is the behavior, which is the action taken by the individual based on their expectations.

The theory of expectations suggests that the more accurate an individual's mental model is, the more accurate their expectations will be, and the more likely they are to behave in a way that is consistent with their expectations. Thus, the theory of expectations has implications for how people make decisions, as well as how they interact with the world around them.

Example of Theory of expectations

An example of the theory of expectations can be seen in a student's decision to study for an upcoming exam. The student has a mental model of their past experiences in studying for exams, and this mental model informs their expectations about the outcome of this particular exam. If they expect that they will do well on the exam, they are more likely to study diligently and make the effort to do their best. If they expect that they will do poorly, they may not put in the same effort and may not get the same results. Therefore, the theory of expectations suggests that an individual's expectations can have a significant influence on their behavior.

When to use Theory of expectations

The theory of expectations can be used to explain a wide range of behaviors, from financial decisions to political opinions. It can be used to understand why people make certain decisions, why they form certain beliefs, and why they take certain actions. Additionally, the theory of expectations can be used to predict how an individual will behave in the future, based on their past experiences and mental model.

Types of Theory of expectations

• The Rational Expectations Theory suggests that individuals make decisions based on their rational beliefs. This means that the expectations they form should be based on the best available information, and that their decisions should be informed by their knowledge and past experience.
• The Adaptive Expectations Theory proposes that individuals form expectations based on their past experiences, and that these expectations can change as new information is presented. This theory suggests that people's expectations may not always be accurate, but that they can adapt over time as new information is presented.
• The Bounded Rationality Theory proposes that individuals are limited in their ability to form accurate expectations about the future, and that their expectations may be based on a limited amount of information or prior experiences. This theory suggests that people's expectations may be incorrect, but that they can still be useful in making decisions.

Advantages of Theory of expectations

• Accurate Mental Model: The theory of expectations suggests that individuals can form accurate expectations about the future based on their past experiences. This means that individuals can use their past experiences to make more accurate predictions about their future outcomes.
• Improved Decision Making: This theory also suggests that individuals can use their mental models to make better decisions in the present. By using their past experiences to form expectations about the future, individuals can take action to ensure that their expectations are met.
• Improved Interactions: The theory of expectations also suggests that individuals can use their mental models to improve their interactions with others. By understanding how others may perceive them and how their behaviors may be interpreted, individuals can use this knowledge to form better relationships.

Limitations of Theory of expectations

• The theory of expectations is limited in its ability to predict behavior, as it does not take into account other factors such as the individual's personality, their environment, or the context of the situation.
• Additionally, the theory does not account for the fact that people's expectations can change over time, or that different people may have different expectations.
• Finally, the theory does not account for the fact that people's expectations are not always accurate, and can be based on erroneous information or inaccurate assumptions.

Other approaches related to Theory of expectations

In addition to the theory of expectations, there are several related approaches that have been used to explain how people form expectations. These approaches include:

• Prospect theory, which suggests that people have different attitudes towards gains and losses, and that these attitudes affect their expectations and behavior.
• Rational expectations, which posits that people make decisions based on rational analysis and are capable of accurately predicting future events.
• Heuristics and biases, which suggests that people often use shortcuts or mental shortcuts to form expectations, and that these may lead to biased expectations and behavior.

The theory of expectations provides a useful framework for understanding how people form expectations and make decisions. The related approaches to the theory of expectations provide additional insight into how people form expectations and make decisions, and can help to explain a variety of behaviors. Understanding the theory of expectations and related approaches can help us to better understand how people interact with the world around them.

Theory of expectations — recommended articles

Fishbein model — Behavioral aspects of decision-making — Behavioral theory — Uncertainty avoidance — Group conformity — Social cognitive theory — Hierarchical regression analysis — Probability theory — Principle of complementarity

References

• Castelfranchi, C. (2005). Mind as an anticipatory device: For a theory of expectations. In Brain, Vision, and Artificial Intelligence: First International Symposium, BVAI 2005, Naples, Italy, October 19-21, 2005. Proceedings 1 (pp. 258-276). Springer Berlin Heidelberg.