Rational expectations

Rational expectations is the theory that people form the most accurate possible expectations about the future that they can, using all information available to them.

Definition

According to Principles of Economics by Timothy Taylor (3rd edition),

Rational expectations. The theory that people form the most accurate possible expectations about the future that they can, using all information available to them.

According to Macroeconomics by Mankiw (7th edition),

Rational expectations. An approach that assumes that people optimally use all available information— including information about current and prospective policies—to forecast the future. (Cf. adaptive expectations.)