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We integrate a plausible expectation formation and learning scheme of boundedly rational investors into a standard user …
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". We observe both stable markets and large bubbles for both small and large markets. The data analysis shows no differences … successfully drives prices back towards the fundamental, but we observe very large bubbles in which the news apparently has no …
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We report on experimental evidence rationalizing the use of heterogeneous agent models. We provide compelling evidence that subjects in laboratory experiments often behave in ways that depart from the rational choice ideal. Further, these subjects' heuristic approaches often differ from one...
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