The paper studies the nature of expectations formation rules for
deterministic economic laws with an expectations feedback
within the framework of dynamical systems theory. In such systems,
the expectations formation rules, called predictors, have a dominant
influence. The concept of a perfect predictor, which generates
perfect-foresight orbits, is proposed and analyzed. Necessary and sufficient
conditions are given
for which local as well as global perfect foresight is possible.
The concept is illustrated for the general linear model
as well as for models of the cobweb type. For the standard overlapping
generations model
of economic growth, the existence of perfect predictions depends
strongly on the savings behavior of the agents and on the
technology.
