I study the long-run behavior of a two-agent economy where agents differ in their beliefs and are endowed with homothetic recursive preferences of the Duffie-Epstein-Zin type. When preferences are separable, the economy is dominated in the long run by the agent whose beliefs are relatively more...

I study the long-run behavior of a two-agent economy where agents differ in their beliefs and are endowed with homothetic recursive preferences of the Duffie-Epstein-Zin type. When preferences are separable, the economy is dominated in the long run by the agent whose beliefs are relatively more...

This paper develops a theory of subjective beliefs that departs from rational expectations, and shows that biases in household beliefs have quantitatively large effects on macroeconomic aggregates. The departures are formalized using model-consistent notions of pessimism and optimism and are...

I study the long-run behavior of an economy with two types of agents who differ in their beliefs and are endowed with homothetic recursive preferences of the Duffie-Epstein-Zin type. Contrary to models with separable preferences in which the wealth of agents with incorrect beliefs vanishes in...

I study the long-run behavior of an economy with two types of agents who differ in their beliefs and are endowed with homothetic recursive preferences of the Duffie-Epstein-Zin type. Contrary to models with separable preferences in which the wealth of agents with incorrect beliefs vanishes in...