At the core of this essay is the idea that cognition is best described as a highly developed homeostatic device aiming to maintain a dynamic equilibrium between internal representations and changes in environmental conditions. The author emphasizes the fundamental role played by aesthetics in...

Abstract This paper fills an important gap in the literature on determinacy and existence of sunspot equilibria in stochastic linear self-referential models. The results in this paper demonstrate that heterogeneity in expectations may alter a model's regions of determinacy. We show how to...

This paper presents a model of local network effects in which agents connected in a social network each value the adoption of a product by a heterogeneous subset of other agents in their neighborhood, and have incomplete information about the structure and strength of adoption complementarities...

Summary This paper considers popular methods for the quantification of survey expectations. We investigate the asymptotic properties of two variants of the probability approach originally suggested by Carlson and Parkin (1975). It is argued that the traditional method can be interpreted as an...

Purpose – Expectations of future market conditions are acknowledged to be crucial for the development decision and hence for shaping the built environment. The purpose of this paper is to study the central London office market from 1987 to 2009 and test for evidence of rational, adaptive and...

Purpose – The purpose of this paper is to examine the implications of asymmetric information for price evolution and investor behavior under a rational expectations framework. Design/methodology/approach – The author presents a simple asymmetric information‐based asset‐pricing model to...

Purpose – The purpose of this paper is to examine the implications of overconfidence for information acquisition and market efficiency. Design/methodology/approach – The paper studies a model of a competitive market with both overconfident and rational traders endogenously acquiring costly...

Purpose – In an introductory finance course, business school students often report difficulty in dealing with several variables and regression equations in testing the forward market efficiency and its relevant hypotheses: forward rate unbiasedness, rational expectations, risk neutrality and...