  We propose a stochastic model of interactive formation of individual
expectations regarding the business climate in an industry. Our model is
motivated by a business climate survey cond ucted since 1960 in Germany by the
Ifo-institute (www.ifo.de). In accordance with the data structure of this
survey, in our model there is asso ciated to each economic agent (business
manager) a random variable with a three-element state space representing her
possible types of expectations. The evolution of individual expectations in a
finite population is then modeled as a spatio-temporal stochastic process with
local interaction between agents.
  An appropriate structure of the interaction between agents in our setting
turns out to be provided by a Festinger-function (in physics called energy
function or Ham iltonian) of the Blume-Capel type. Time series of the fractions
of agents holding each type of expectations are obtained for the model by Monte
Carlo simulations. We find that our model reproduces some generic features of
the empirical time series obtained from the German business-climate data, in
particu lar the occurrence of abrupt large but rare swings. In our model, such
swings occur as spontaneous phase changes between macroscopic states.
