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rationality ; Keynes; Knight …One of Keynes’ core issues in his liquidity preference theory is how fundamental uncertainty affects the propensity to …
Persistent link: https://www.econbiz.de/10003905066
rationality ; Keynes ; Knight …One of Keynes' core issues in his liquidity preference theory is how fundamental uncertainty affects the propensity to …
Persistent link: https://www.econbiz.de/10003886826
One of Keynes' core issues in his liquidity preference theory is how fundamental uncertainty affects the propensity to …
Persistent link: https://www.econbiz.de/10013132176
In this paper I study the relationship between rationality and asset prices when agents have heterogeneous and incorrect beliefs about future events. Using the fully rational pricing as a benchmark, I show that when agents behave according to the Subjective Generalized Kelly rule (Bottazzi et...
Persistent link: https://www.econbiz.de/10011805975
We propose a heuristic switching model of an asset market where the agents' choice of heuristic is consistent with their individual risk aversion. They choose between a fundamentalist and a trend-following rule to form expectations about the price of a risky asset. Given their risk aversion,...
Persistent link: https://www.econbiz.de/10012157926
This paper provides a new life cycle model that takes into account key elements of bounded rationality. The paper shows that the model can account for patterns in the data that are hard to explain by the standard life cycle model. Among other patterns, the model predicts that, typically, the...
Persistent link: https://www.econbiz.de/10010573230
A risky choice experiment is based on one-dimensional choice variables and risk neutrality induced via binary lottery incentives. Each participant confronts many parameter constellations with varying optimal payoffs. We assess (sub)optimality, as well as (non)optimal satisficing, partly by...
Persistent link: https://www.econbiz.de/10012981935
In this paper, a model of bounded rational investors investing their portfolio in a passive investment vehicle (e.g., an Exchange Traded Fund replicating a broad index) or an actively managed fund is presented. The model proposes that the quick reswitching of these short-term oriented investors...
Persistent link: https://www.econbiz.de/10009521601
This paper analyzes a dynamic stochastic equilibrium model of an asset market based on behavioral and evolutionary principles. The core of the model is a non-traditional game-theoretic framework combining elements of stochastic dynamic games and evolutionary game theory. Its key characteristic...
Persistent link: https://www.econbiz.de/10012219095
Understanding a Complex World -- What is Complexity? -- Measurement of Complexity -- Complexity Economics -- The Economy as a Complex Adaptive System -- Nonlinearity -- Feedback, Circular Causality, and System Dynamics -- Self-Organization -- Emergence, Levels, and Hierarchy -- Economic...
Persistent link: https://www.econbiz.de/10015044873