This paper proposes a new test to distinguish between the two leading theories of discrimination: preference versus information. Discrimination based on preferences occurs when people behave as if they refuse to change their stereotypes about the capabilities of discriminated individuals. Those...

We report results of an internet experiment designed to test the theory of informational cascades in financial markets. More than 6000 subjects, including a subsample of 267 consultants from an international consulting firm, participated in the experiment. As predicted by theory, we find that...

We report results of an internet experiment designed to test the theory of informational cascades in financial markets. More than 6000 subjects, including a subsample of 267 consultants from an international consulting firm, participated in the experiment. As predicted by theory, we find that...

The equilibrium exchange rate is a closely scrutinized variable in international finance and monetary economics. A model to estimate an equilibrium exchange rate is proposed in this paper. It consists of several building blocks: a state-space structure, uncovered interest parity and the...

A two-block open economy model is estimated in this paper using Australian and U.S. data. Evaluation of the estimated model is carried out in relation to a simple closed economy alternative. Namely, we inspect the implied transmission mechanisms, and examine the relative out-of-sample...

This paper investigates the main sources of instability in Brazil during the currency and financial distress episode of 2002. We test for financial contagion from the Argentine crisis and the impact of factors including IMF intervention and political uncertainty in raising the probability of...

This paper presents experimental evidence about how individuals learn from information that comes from inside versus outside their ethnic group. In the experiment, Thai subjects observed information that came from Americans and other Thais that they could use to help them answer a series of...

This paper estimates a DSGE model with learning to re-examine the evidence on time variation in post-war U.S. monetary policy. Several papers document a regime switch, by showing that policy changed from `passive' and destabilizing in the pre-1979 period to `active' and stabilizing in the...

We propose a Bayesian methodology that enables banks to improve their credit scoring models by imposing prior information. As prior information, we use coefficients from credit scoring models estimated on other data sets. Through simulations, we explore the default prediction power of three...

Bayesian Statisticians, decision theorists, and game theorists often use Bayesian representations to describe the probability distribution governing the evolution of a stochastic process. Generally, however, one given distribution has infinitely many different Bayesian representations. This...