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The weak rationality principle in economics
Kirchgässner, Gebhard (contributor) - 2005
The weak rationality principle is not an empirical statement but a heuristic rule of how to proceed in social sciences …-foundation and, therefore, employ the rationality assumption in economic models. Then, with reference to the ‘bounded rationality … a part of the rationality assumption. We conclude with some remarks on handling the problems of ‘free will’ as well as …
Persistent link: https://www.econbiz.de/10002730896
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Complexity and choice
Salant, Yuval; Spenkuch, Jörg L. - 2021
-with-evaluation-errors theory that incorporates both dimensions and delivers sharp empirical predictions about their effect on choice behavior. We …
Persistent link: https://www.econbiz.de/10012602341
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Cognitive uncertainty
Enke, Benjamin; Graeber, Thomas Wilhelm - 2019
This paper introduces a formal definition and an experimental measurement of the concept of cognitive uncertainty: people's subjective uncertainty about what the optimal action is. This concept allows us to bring together and partially explain a set of behavioral anomalies identified across four...
Persistent link: https://www.econbiz.de/10012138914
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Boundedly rational decision emergence : a general perspective and some selective illustrations
Güth, Werner - 2000
A general framework is described specifying how boundedly rational decision makers generate their choices. Starting from a Master Module which keeps an inventory of previously successful and unsuccessful routines several submodules can be called forth which either allow one to adjust behavior...
Persistent link: https://www.econbiz.de/10009781608
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Discrete adjustment to a changing environment : experimental evidence
Khaw, Mel Win; Stevens, Luminita; Woodford, Michael - 2016
We conduct a laboratory experiment to shed light on the cognitive limitations that may affect the way decision makers respond to changes in their economic environment. The subjects solve a tracking problem: they estimate the probability of a binary event, which changes stochastically. The...
Persistent link: https://www.econbiz.de/10011586279
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Bubbles and crashes in a behavioural finance model
De Grauwe, Paul; Grimaldi, Marianna - 2004
We develop a simple model of the exchange rate in which agents optimize their portfolio and use different forecasting rules. They check the profitability of these rules ex post and select the more profitable one. This model produces two kinds of equilibria, a fundamental and a bubble one. In a...
Persistent link: https://www.econbiz.de/10011401333
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Learning from zero : how to make consumption-saving decisions in a stochastic environment with an AI algorithm
Shi, Rui - 2021 - This draft: August 16, 2021
This exercise offers an innovative learning mechanism to model economic agent's decision-making process using a deep reinforcement learning algorithm. In particular, this AI agent is born in an economic environment with no information on the underlying economic structure and its own preference....
Persistent link: https://www.econbiz.de/10012603191
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How does the EU ETS reform impact allowance prices? : the role of myopia, hedging requirements and the hotelling rule
Bocklet, Johanna; Hintermayer, Martin - 2020
the impact of the recent reform on allowance prices. By including bounded rationality such as myopia or hedging … restrictive allowance supply may even cause a physical shortage of allowances. Yet, neither form of bounded rationality can fully …
Persistent link: https://www.econbiz.de/10012291879
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Monetary policy analysis when planning horizons are finite
Woodford, Michael - 2018
It is common to analyze the effects of alternative monetary policy commitments under the assumption of fully model-consistent expectations. This implicitly assumes unrealistic cognitive abilities on the part of economic decision makers. The relevant question, however, is not whether the...
Persistent link: https://www.econbiz.de/10011864457
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Associative memory and belief formation
Enke, Benjamin; Schwerter, Frederik; Zimmermann, Florian - 2019
This paper experimentally studies the role of associative memory for belief formation. Realworld 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/10012118551