14.1 R.lucas Supply Function R.lucas Supply Function O Expectation of future price of corporation i is constituted by two parts The first part is to accept public economic information The second part is to adjust data given by experts by one' s own experience, and constant b is corporations dependence level of his own experience. If b is equal to 0.5, that means corporations believe in half of their own experience and half of expert predictions; and if b is equal to l, that means corporation fully trust their own experlence pe=p+b(P-P 复且学结济学院14.1 R.lucas Supply Function vR.lucas Supply Function ¤Expectation of future price of corporation i is constituted by two parts v The first part is to accept public economic information v The second part is to adjust data given by experts by one’s own experience, and constant b is corporation’s dependence level of his own experience. If b is equal to 0.5, that means corporations believe in half of their own experience and half of expert predictions; and if b is equal to 1, that means corporation fully trust their own experience. ) ˆ ( P P ˆ b Pi P e    Pˆ