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Optimal Sticky Prices under Rational Inattention

Mackowiak, Bartosz; Wiederholt, Mirko - In: American Economic Review 99 (2009) 3, pp. 769-803

This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to...

Persistent link: https://www.econbiz.de/10005014643

Does Money Illusion Matter? Reply

Fehr, Ernst; Tyran, Jean-Robert - In: American Economic Review 104 (2014) 3, pp. 1063-71

The data in Fehr and Tyran (FT, 2001) and Luba Petersen and Abel Winn (PW,2013) show that money illusion plays an … important role in nominal price adjustment after a fully anticipated negative monetary shock. Money Illusion affects subjects …

Persistent link: https://www.econbiz.de/10010815742

Does Money Illusion Matter? Comment

Petersen, Luba; Winn, Abel - In: American Economic Review 104 (2014) 3, pp. 1047-62

This paper experimentally investigates whether money illusion generates substantial nominal inertia. Building on the … their decision task. The cognitive challenge of this task explains the majority of the magnitude of nominal inertia; money … functions, not the prevalence of money illusion. …

Persistent link: https://www.econbiz.de/10010747837

The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation

Allcott, Hunt; Rogers, Todd - In: American Economic Review 104 (2014) 10, pp. 3003-37

We document three remarkable features of the Opower program, in which social comparison-based home energy reports are repeatedly mailed to more than six million households nationwide. First, initial reports cause high-frequency "action and backsliding," but these cycles attenuate over time....

Persistent link: https://www.econbiz.de/10010949117

Behavioral Implementation

Clippel, Geoffroy de - In: American Economic Review 104 (2014) 10, pp. 2975-3002

Implementation theory assumes that participants' choices are rational, in the sense of being consistent with the maximization of a context- independent preference. The paper investigates implementation under complete information when individuals' choices need not be rational.

Persistent link: https://www.econbiz.de/10010949124

Efficiency, Equality, and Labeling: An Experimental Investigation of Focal Points in Explicit Bargaining

Isoni, Andrea; Poulsen, Anders; Sugden, Robert; Tsutsui, Kei - In: American Economic Review 104 (2014) 10, pp. 3256-87

We investigate Schelling's hypothesis that payoff-irrelevant labels ("cues") can influence the outcomes of bargaining games with communication. In our experimental games, players negotiate over the division of a surplus by claiming valuable objects that have payoff-irrelevant spatial locations....

Persistent link: https://www.econbiz.de/10010949134

Correlation Neglect, Voting Behavior, and Information Aggregation

Levy, Gilat; Razin, Ronny - In: American Economic Review 105 (2015) 4, pp. 1634-45

In this paper we analyze elections when voters underestimate the correlation between their information sources ("correlation neglect"). We find that this cognitive bias can improve political outcomes. We show that the extreme beliefs which result from correlation neglect induce some voters to...

Persistent link: https://www.econbiz.de/10011211795

Microstructure Bluffing with Nested Information

Chakraborty, Archishman; Yilmaz, Bilge - In: American Economic Review 98 (2008) 2, pp. 280-84

Persistent link: https://www.econbiz.de/10005241204

Evolution of Time Preferences and Attitudes toward Risk

Netzer, Nick - In: American Economic Review 99 (2009) 3, pp. 937-55

This paper explores a general model of the evolution and adaption of hedonic utility. It is shown that optimal utility will be increasing strongly in regions where choices have to be made often and decision mistakes have a severe impact on fitness. Several applications are suggested. In the...

Persistent link: https://www.econbiz.de/10005014633

Reference-Dependent Consumption Plans

Koszegi, Botond; Rabin, Matthew - In: American Economic Review 99 (2009) 3, pp. 909-36

consumption. Because changes in wealth are news about future consumption, preferences over money are reference-dependent. If news …

Persistent link: https://www.econbiz.de/10005014649

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