Risk, expectation and market active level

Individuals have different expectations because of the existence of known and unknown risks, as there are different expectations, individuals make different consumption and investment decisions. In one economy, individuals in the economy will form an overall expectation, which could be from individual expectations. When the overall expectations are different, the market active levels in the economies with different overall expectations are different.

However, individual expectations and the overall expectation can interact with each other. The majority of the population is very likely to amend their individual expectations according to the overall expectations reported by some official authorities; meanwhile, the overall expectations could be influenced by some individual expectations, such as some large financial institutions' expectations. Such interaction could make the overall expectation and individual expectations be moving towards each other, and in the economy, when all individuals' expectations about economies are similar, the majority of the population has similar expectations about different economies around the world.

However, individuals still have some disagreement about others' expectations. This is because individuals work in different sectors and live in different environments, they have access to different information. Sometimes they could be right and sometimes they could wrong. Usually, they are more likely to be wrong when their expectations are significantly different from the mainstream overall expectation because they do not have full access to the information. However, when they try to make expectations or estimations about an economy they are unfamiliar with, they are more likely to follow the mainstream expectations.