Writing about the recently departed Robert Lucas, John Cochrane gives a nice clear explanation of one of his central but much-misunderstood contributions to economics:

“[R]ational expectations” is really just a humility condition. It says, don’t write models in which the predictions of the model are different from the expectations in the model. . . . It does not say that people are big super rational calculating machines. It just says that they eventually catch on.

Scott Sumner adds:

Many people reject rational expectations because it seems to suggest that the public is composed of super intelligent calculating machines. But that’s not at all what it means. Bennett McCallum suggested that it would have been better to call the concept “consistent expectations.” The claim is actually quite modest. All the rational expectations assumption says is that if your model specifically implies that X is true; don’t assume the public believes that X is false, at least not without evidence for that claim.