ABSTRACT
At about the same time Muth’s RE paper was published in 1961, two other articles appeared regarding the role of information and expectations in economics. Stigler’s 1961 JPE paper on the economics of information is well known and will not be discussed here. The other paper by Malmgren entitled “Information, expectations and the theory of the firm” published in the August 1961 issue of QJE deserves attention because of the linkage the author made between the types of information available to and the expectations of the firm. Now, Malmgren cited Knight (1921) as the source for his own approach to foresight and risk and Hayek (1937: 36) as the source for the notion of what he called “expectational equilibrium” (1961: 403, 405). While Hayek himself had said (1937: 33-4) that Knight (1921) had stimulated work on foresight and risk, Hayek added “a more complete survey of the process by which the significance of anticipations was gradually introduced into economic analysis would probably have to begin with Professor Irving Fisher’s Appreciation and Interest (1896)”.
