Roman Frydman, Professor of Economics at New York University, was one of the early critics of the Rational Expectations Hypothesis (REH). In his 1982 article in the American Economic Review, and the 1983 volume (co-edited with Edmund Phelps) Individual Forecasting and Aggregate Outcomes: “Rational Expectations” Examined (Cambridge University Press), he showed that REH models suffer from fundamental epistemological flaws. In the 1990s, Frydman collaborated with Andrzej Rapaczynski on a multi-country research and policy project on the post-communist transition in Eastern Europe, producing numerous books and articles that have been widely cited. In recent years, Frydman has worked with Michael Goldberg on a new approach to macroeconomic analysis that jettisons REH models and places rational individuals’ need to cope with non-routine change and imperfect knowledge at the center of the research agenda. They presented their approach in the path-breaking book Imperfect Knowledge Economics (Princeton University Press, 2007). In their latest book, Beyond Mechanical Markets (Princeton University Press, 2011), Frydman and Goldberg apply and extend Imperfect Knowledge Economics to assess the causes of the global financial crisis, as well as to propose a new policy framework aimed at rectifying systemic failures. Since October 2011, Frydman has been Chair of the Institute for New Economic Thinking (INET) Program on Imperfect Knowledge Economics.
Homepage at NYU: http://www.econ.nyu.edu/user/frydmanr/