Expectations, conjectures and beliefs The legacy of Marshall, Kahn and Keynes

The purpose of this paper is to portray a mode of inquiry into expectations by three Cambridge authors in which the expectations are not conceptualized or modelled on the basis of a probability distribution. As to whether this is due to a clearly stated opposition (as in the case of Keynes) or want of the appropriate technique, or indeed a different research approach environment, there may be more than one answer. Within its limited and non-exhaustive scope, this paper offers an interpretation based on the idea that these economists shared a view of the method appropriate to economic theorizing. I first present a summary of the main points made by Marshall, Kahn and Keynes on the role of expectations, then I address two issues relevant in contemporary discussion, i.e. the role of expectations in generating market instability and the advantages of taking future markets and experiments as evidence of observable expectations. This latter point leads to a brief discussion on the dividing line between two currents of thought in the Cambridge tradition, namely subjective vs. observable quantities, associated with the followers of the view of the matter taken by Keynes on the one hand and by Sraffa on the other.