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Behavioral New Keynesian Models : Learning vs. Cognitive Discounting

Meggiorini, Greta; Milani, Fabio - 2021

This paper estimates a New Keynesian model with new and old behavioral elements. Agents in the model exhibit cognitive discounting, or myopia: they discount variables far into the future at higher rates than typically implied in the benchmark model. We investigate the model under different...

Persistent link: https://www.econbiz.de/10013229788

Heterogeneity in Individual Expectations, Sentiment, and Constant-Gain Learning

Cole, Stephen J. - 2020

The adaptive learning approach has been fruitfully employed to model the formation of aggregate expectations at the macroeconomic level, as an alternative to rational expectations. This paper uses adaptive learning to understand, instead, the formation of expectations at the micro-level, by...

Persistent link: https://www.econbiz.de/10012831652

Adaptive Agents May Be Smarter than You Think : Unbiasedness in Adaptive Expectations

Palestrini, Antonio; Gallegati, Mauro; Delli Gatti, Domenico - 2021

Agents forming adaptive expectations generally make systematic mistakes. This characterization has fostered the rejection of adaptive expectations in macroeconomics. Experimental evidence, however, shows that in complex environments human subjects frequently rely on adaptive heuristics –...

Persistent link: https://www.econbiz.de/10013217385

Bounded Rationality, Monetary Policy, and Macroeconomic Stability

Ilabaca, Francisco - 2019

This paper estimates a Behavioral New Keynesian model to revisit the evidence that passive US monetary policy in the pre-1979 sample led to indeterminate equilibria and sunspot-driven fluctuations, while active policy after 1982, by satisfying the Taylor principle, was instrumental in restoring...

Persistent link: https://www.econbiz.de/10012866811

Dynamic Rational Inattention and the Phillips Curve

Afrouzi, Hassan; Yang, Choongryul - 2021

-driven theory of dynamic pricing in which the Phillips curve slope is endogenous to systematic aspects of monetary policy. In our …

Persistent link: https://www.econbiz.de/10013250042

Incentive Complexity, Bounded Rationality and Effort Provision

Abeler, Johannes; Huffmann, David B.; Raymond, Collin - 2023

Using field and laboratory experiments, we demonstrate that the complexity of incentive schemes and worker bounded rationality can affect effort provision, by shrouding attributes of the incentives. In our setting, complexity leads workers to over-provide effort relative to a fully rational...

Persistent link: https://www.econbiz.de/10014346847

Associative Memory and Belief Formation

Enke, Benjamin - 2019

This paper experimentally studies the role of associative memory for belief formation. Real-world information signals are often embedded in memorable contexts. Thus, today's news, and the contexts they are embedded in, may cue the selective retrieval of similar past news and hence contribute to...

Persistent link: https://www.econbiz.de/10012859993

Cognitive Flexibility or Moral Commitment? Evidence of Anticipated Belief Distortion

Saccardo, Silvia - 2020

Do people anticipate the conditions that enable them to manipulate their beliefs when confronted with unpleasant information? We investigate whether individuals seek out the “cognitive flexibility” needed to distort beliefs in self-serving ways, or instead attempt to constrain it, committing...

Persistent link: https://www.econbiz.de/10012823149

Arbitrage and Beliefs

Khorrami, Paymon - 2020

We study a segmented-markets setting in which self-fulfilling volatility can arise. The only requirements are (i) asset … valuation ratios stationary (e.g., cash flow growth rises when valuations rise). We prove that when self-fulfilling volatility … susceptible to self-fulfilling fluctuations. The tight theoretical connection between price volatility and arbitrage is detectable …

Persistent link: https://www.econbiz.de/10012825392

Uncertainty, Imperfect Information, and Expectation Formation Over the Firms's Life Cycle

Chen, Cheng - 2020

forecast errors. However, they make more precise forecasts and less correlated forecast errors when they become more …

Persistent link: https://www.econbiz.de/10012826001