Macroeconomics must take radical uncertainty into account, if it aims at contributing to the solution of serious real-world problems such as climate change. Allowing for radical uncertainty must happen at two levels: the level of modeling and the level of the scientific discipline. I argue that...

We experimentally test the price-setting behavior of firms in the Rotemberg (1982) model in order to explain puzzles in the New Keynesian Phillips curve (NKPC). By constructing categories and a quantitative measure that compare behavior with optimum we find heterogeneous price-setting behavior...

Fairness considerations are important determinants of behavior in unstructured bargaining situations with equal bargaining power. If the surplus over which the bargaining takes place was created by separate, individual efforts, several entitlement related fairness ideals might be relevant. In...

Previous experimental investigations have shown that expectations are not perfectly rational due to several forms of bias. Traditional adaptive models, however, in many cases do not perfectly describe the formation of expectations either. This paper makes two contributions to the experimental...

We report the results of a laboratory experiment, in which we observed the behavior of agents in a simple macroeconomic setting. The core question of this paper is whether standard macroeconomic models generate correct predictions despite their unrealistic assumptions of prefectly rational...