In
economics, "
rational expectations" are
model-consistent expectations, in that agents inside the model on average assume the model's predictions are valid. Rational expectations ensure internal consistency in aggregate stochastic models. To obtain consistency within a model, the predictions of the future value of economically relevant variables are optimal given the decision-makers' information set and model structure. The rational expectations assumption is used especially in many contemporary
macroeconomic models. Rational expectations does not imply individual rationality and should not be confused with
rational choice theory, which is used extensively in, among others,
game theory.