This chapter examines John Maynard Keynes' views on knowledge, expectations, and rationality. It focuses not only on Keynes' ideas on expectation formation but also on the degree of confidence attached to those expectations (i.e., uncertainty) and what this means for macroeconomic theory. After providing a synthetic account of Keynes' ideas on knowledge and expectations, along with his understanding of the source of uncertainty, the chapter considers his emphasis on the role of conventional judgment, and of conventions more generally, as well as the implications of these ideas for how we may understand and use the concept of rationality in a Keynesian framework, alongside considerations of logic and consistency. Keynes' concern with the interplay between individuality and sociality sheds some light on Keynes in relation to the formulation of microfoundations. The chapter concludes with a discussion of the implications of Keynes' ideas on knowledge, expectations, and rationality for economic methodology.
Speculative housing markets and rent control: insights from nonlinear economic dynamics
