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In this paper I study the relationship between rationality and asset prices when agents have heterogeneous and … those of the fully rational economy. Hence the fact that agents use non-optimal (heuristic) decision rules may correct for …
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We report results from an experiment that evaluates the consequences of having a socially motivated monitor use the market price of a bank’s traded assets to decide whether or not to intervene in the bank’s operations. Consistent with predictions of a recent theoretical paper by Bond,...
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