Expectations which are model-consistent, leading to behaviour consistent with the model of the economy used in forming them. If there is uncertainty a rational expectation need not coincide with the actual outcome (it is not perfect foresight), but on average it cannot be improved by the use of any available information. When obtaining and analysing information is costless, the use of rational expectations can be based on the argument that individuals, firms, or governments will make losses in terms of utility, profits, or achievement of policy objectives if they do not use all available information including the best available model of the economy. If accessing and manipulating information is expensive in terms of resources or effort, it becomes rational to trade accuracy of expectations against cost.