The Human Income-Expenditure Balance -- Fundamentals of the Theory of Diminishing Utility -- Analysis of a Non-Monetary Economy -- Extension to Analysis of a Monetary Economy -- Human Psychology and Economic Fluctuation -- The Effectiveness of Aggregate Demand Management Policy -- Dynamic...

We explore the business cycle implications of expectation shocks and of two well-known psychological biases, optimism and overconfidence. The expectations of optimistic agents are biased toward good outcomes, while overconfident agents overestimate the precision of the signals that they receive....