“Rationally Turbulent Expectations”

Kent Osband writes: About 15 years ago you kindly linked an article I wrote on “rational turbulence.” I’d like to let you know that I have recently summarized much more research along these lines in a short book Rationally Turbulent Expectations. I have published it as cheaply as color printing allows and also posted all chapters for free on ssrn, starting with this overview. The main finding, summarized in the first few pages of Chapter 4, is that–once we allow for even tiny doubts about the the stability of an iid process–Bayesian learning has calm and turbulent phases, with fast learning more turbulent. It explains why differences in opinion between two reasonable people often widen before they narrow. I think this deserves broader attention in that people can learn to disagree more respectfully. Hardly anyone will listen to me but many listen to you, so I am hopeful you will persuade yourself of this quickly and help persuade others. I clicked through and took a look. Lots of…