Adaptive expectations is an economic theory suggesting that individuals form their expectations about future events based on past experiences. People adjust their predictions gradually as new information becomes available, rather than making sudden changes. This approach is often used in understanding how consumers and businesses anticipate inflation or economic growth. In this framework, if inflation has been high in the past, individuals will expect it to continue at a similar rate in the future. Over time, as actual inflation rates change, people will update their expectations accordingly. This concept is important in fields like macroeconomics and finance.