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Welfare Economics. A key theme of Cognitive Economics is finite cognition (often misleadingly called "bounded rationality …
Persistent link: https://www.econbiz.de/10012457832
In this paper we address the following question: To what extent is the hypothesis that voters vote sincerely testable or falsifiable? We show that using data only on how individuals vote in a single election, the hypothesis that voters vote sincerely is irrefutable, regardless of the number of...
Persistent link: https://www.econbiz.de/10012465734
Most economic analyses presume that there are limited differences in the prior beliefs of individuals, as assumption most often justified by the argument that sufficient common experiences and observations will eliminate disagreements. We investigate this claim using a simple model of Bayesian...
Persistent link: https://www.econbiz.de/10012466013
We propose a new measure of the cost of information structures in rational inattention problems, the "neighborhood-based" cost functions, given that many applications involve states with a topological structure. These cost functions summarize the results of a sequential information sampling...
Persistent link: https://www.econbiz.de/10012479267
We analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent-based model populated by heterogeneous, interacting firms. Agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change,...
Persistent link: https://www.econbiz.de/10012481880
This paper studies how interest groups allocate campaign contributions when congressmen are connected by social ties. We establish conditions for the existence of a unique Nash equilibrium in pure strategies for the contribution game and characterize the associated allocation of the interest...
Persistent link: https://www.econbiz.de/10012455941
Social distancing via shelter-in-place strategies, and wearing masks, have emerged as the most effective non-pharmaceutical ways of combatting COVID-19. In the United States, choices about these policies are made by individual states. We develop a game-theoretic model and then test it...
Persistent link: https://www.econbiz.de/10012496132
Periodic sharp sustained increases and then reversals in asset prices lead many to posit irrational price bubbles. The general case for irrationality is that real asset prices simply have moved too much given the future real cash flows the assets are reasonably likely to produce. A corollary for...
Persistent link: https://www.econbiz.de/10012467354
Research in behavioral corporate finance takes two distinct approaches. The first emphasizes that investors are less than fully rational. It views managerial financing and investment decisions as rational responses to securities market mispricing. The second approach emphasizes that managers are...
Persistent link: https://www.econbiz.de/10012467826
The discount on closed-end funds is widely accepted as proof of investor irrationality. We show,however, that a parsimonious rational model can generate a discount that exhibits many of the characteristics observed in practice. The only required features of the model are that managers have...
Persistent link: https://www.econbiz.de/10012468281