Overconfidence has been extensively documented in psychology and economics. This paper studies the long-term interaction between two overconfident agents who learn about common payoff-relevant fundamentals, such as the quality of a joint project or their working environment, and choose how much...

Overconfidence has been extensively documented in psychology and economics. This paper studies the long-term interaction between two overconfident agents who learn about common payoff-relevant fundamentals, such as the quality of a joint project or their working environment, and choose how...

This chapter surveys heterogeneous agent models with rational expectations that deliver a finite number of heterogeneous agents as an equilibrium outcomes. Instead of having a distribution with infinite support to follow, this class of models endogenously generates a finite number of agents as...